In the context of the health crisis, Group sales fell by 34.9% in the first half (1.26 million units sold) in a global market down 28.3%[1].
As a consequence of this trend, first half revenues amounted to EUR18.4 billion (-34.3%). At constant exchange rates and perimeter[2], the decrease would have been 32.9%.
After taking into account a negative impact of the health crisis estimated at approximately EUR1.8 billion[3], the Group recorded a negative operating margin of -EUR1,203 million in the first half.
Group operating result stood at -EUR2,007 million after booking non-recurring charges.
Net income amounted to -EUR7,386 million and was heavily impacted by Nissan's negative contribution (-EUR4,817 million).
Automotive operational free cash flow at June 30, 2020 was negative at -EUR6,375 million, notably due to the impact of the activity decline on working capital requirement.
On June 30, 2020, liquidity reserves of the Automotive activity showed an improvement of EUR6.5 billion compared to March 31, 2020 and stood at EUR16.8 billion. This amount includes the EUR5 billion credit facility agreement benefiting from the guarantee of the French State.
High level order book at June 30, 2020.
ZOE sales up nearly 50% and E-TECH hybrid technology developed by the Group, due to launch in second half of the year.
The Group is on track to meet its CAFE targets for 2020.
Confirmation of the fixed cost reduction target of EUR600 million this year.
Given the uncertainties around the health situation, both in Europe and in emerging markets, Groupe Renault estimates that it is not in a position to give a reliable guidance for the full year.
Luca de Meo, CEO of Renault, declared: 'Although the situation is unprecedented, it is not final. Together with all of the Group's management teams and employees, we are fully dedicated to correcting the situation through a strict discipline that will go beyond reducing our fixed costs. Preparing for the future also means building our development strategy, and we are actively working on this. I have every confidence in the Group's ability to recover.'
Clotilde Delbos, Deputy CEO of Renault, declared: 'The health crisis we are currently going through has massively impacted the Group's first half results and added to our pre-existing difficulties. The commitment of all our employees has allowed us to face this situation. This on-going engagement, the 2022 cost-reduction plan project, our liquidity reserves and of course the arrival of our new CEO, make me confident that we will be able to turn around our performance as quickly as possible.'
Boulogne-Billancourt, 7/30/2020 - Group revenues reached EUR18,425 million (-34.3% compared to the first half of 2019). At constant exchange rates and perimeter[1], Group revenues would have decreased by 32.9%.
Automotive excluding AVTOVAZ revenues amounted to EUR15,727 million, down 36.6% compared to the first half of 2019. This decrease was mainly explained by a negative volume effect of -29.6 points and -7.3 points for the sales to partners. The Covid-19 health crisis was the main reason of these two impacts. The currency effect was negative 1.5 points mainly linked to the devaluation of the Argentinian peso, the Brazilian real and the Turkish lira.
The price effect, positive by 2.0 points, came from the repositioning of our new vehicles, notably Clio and Captur and the efforts to offset regulatory costs in Europe and currency devaluations in emerging countries. The product mix effect is positive by 0.4 points thanks to the increase in sales of ZOE. 'Others' effects weighed negatively for 0.8 points, notably due to a lower contribution from aftersales strongly impacted by confinement measures.
The Group recorded a negative operating margin of -EUR1,203 million representing -6.5% of revenues. The negative impact of the Covid-19 health crisis was estimated at around EUR1.8 billion[2] for this semester.
The Automotive excluding AVTOVAZ operating margin was down EUR2,629 million to -EUR1,648 million.
Volume and sales to partners effect had a negative impact of EUR2,078 million. The Monozukuri effect was negative by EUR40 million: purchasing performance was weaker than usual, notably due to a limited production volume resulting from the temporary closure of plants. The impact of R&D in Monozukuri was a negative EUR133 million despite a EUR493 million decrease in cash expenses. This was due to a decrease in the capitalisation ratio of nearly 6 points and an increase in R&D amortisation of EUR126 million.
Mix/price/enrichment effect was negative EUR203 million mainly because of new products enrichment and regulatory content. The EUR133 million improvement in G&A came mainly from the Group's efforts to limit its costs, notably in the context of the 2o22 plan project and the decline in activity. Currencies and raw materials weighed respectively for -EUR186 million and -EUR90 million.
The operating margin of AVTOVAZ amounted to -EUR2 million, to be compared with EUR82 million in the first half of 2019, reflecting mostly the impact of the decrease of 30.1% in revenues.
Sales Financing contributed EUR469 million to the Group operating margin (including a negative currency effect for EUR15 million), compared with EUR591 million in the first half of 2019. The operating expenses ratio improved by 7 basis points, reflecting RCI Bank and Services ability to adapt to its level of activity.
On the other hand, the total cost of risk increased to 0.99% of the average performing assets compared to 0.40% in the first half 2019. It was strongly impacted by an increase in provisioning related to the health crisis and the negative consequences of confinement policies on repossession processes.
Other operating income and expenses stood at -EUR804 million (compared with -EUR133 million in the first half of 2019). They included -EUR445 million in impairment of assets, in particular for some vehicles whose volume assumptions have been revised, -EUR166 million in provisions for restructuring costs, in particular related to the early retirement plan in France, and -EUR153 million in capital losses notably in China.
After taking into account the other operating income and expenses, Group operating income came to -EUR2,007 million compared with EUR1,521 million in the first half of 2019.
Net financial income and expenses amounted to -EUR214 million, compared with -EUR184 million in the first half of 2019. This deterioration, despite a decrease in the cost of funding, is primarily explained by the absence of dividends paid by Daimler (EUR54 million in 2019).
The contribution of associated companies came to -EUR4,892 million, compared with -EUR35 million in the first half of 2019. This decline came mostly from Nissan's contribution, down EUR4,796 million including -EUR4,290 million of impairments and restructuring costs (including -EUR1,934 million of IFRS restatements).
Current and deferred taxes represented a charge of EUR273 million compared with a charge of EUR254 million in the first half of 2019. It includes -EUR268 million due to the discontinuation of the recognition of deferred tax assets on AVTOVAZ tax losses.
Net income reached -EUR7,386 million and net income, Group share totaled -EUR7,292 million (-EUR26.91 per share compared with EUR3.57 per share in the first half of 2019).
Automotive operational free cash flow was negative at -EUR6,375 million after taking into account a positive free cash flow for AVTOVAZ of EUR110 million and EUR135 million of restructuring expenses. Excluding AVTOVAZ and restructuring costs, this results from EUR22 million cash flow, investments amounting to EUR2,543 million (down EUR367 million compared with the first half of 2019) and the negative impact of the change in working capital requirement for EUR3,829 million.
At June 30, 2020, total inventories (including independent dealers) represented 547,000 vehicles compared with 630,000 at the end of June 2019, allowing to meet a high order book as of June 30, 2020.
The Automotive activity at June 30, 2020 held EUR16.8 billion of liquidity reserves (EUR10.3 billion at March 30, 2020) which include the EUR5 billion credit facility agreement benefiting from the guarantee of the French State.
OUTLOOK 2020
Given the uncertainties around the health situation, both in Europe and in emerging countries, the Group estimates that it is not in a position to give a reliable guidance for the full year. Furthermore, the Group confirms its target to achieve EUR600 million of cost reduction this year, representing 30% of the 2022 plan project cost savings.
GROUPE RENAULT CONSOLIDATED RESULTS: See details at: https://www.press.renault.co.uk/en-gb/releases/2761
NISSAN MOTOR CO LTD 
