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The strong improvement in operating profitability in the second half shows the first positive impacts of the actions taken in the context of a year heavily impacted by Covid-19.
The results for the second half of 2020 (Group operating margin at 3.5% and positive Automotive operational free cash flow) mark the first step in the Group's recovery. The achievement of 60% of the €2 billion savings plan objectives right from the first year (compared with 30% announced), together with the implementation of the new commercial policy of the “Renaulution” strategic plan largely contributed to these results.
However, Fiscal Year 2020 remains strongly impacted by Covid-19.
After a first half impacted by the Covid-19, the Group has significantly turned around its performance in the second half. This result is the fruit of all employees’ efforts, the successful acceleration on our fixed cost cutting plan and pricing policy improvement. The priority is profitability and cash generation, as announced during our strategic plan « Renaulution ». 2021 is set to be difficult given the unknowns regarding the health crisis as well as electronic components supply shortages. We will face these challenges collectively, keeping the momentum towards recovery we’ve been successfully engaged in since last summer, said Luca de Meo, CEO Groupe Renault
Group revenues reached €43,474 million (-21.7%). At constant exchange rates, the decrease would have been -18.2%.
Automotive excluding AVTOVAZ revenues stood at €37,736 million, down -23.0%.
The volume effect was -19.2 points. It stemmed primarily from the health crisis and, to a lesser extent, from our commercial policy favoring profit over volume.
Sales to partners declined by -5.1 points, also impacted by the health crisis and the Nissan Rogue production discontinuation.
Forex impact was negative -2.8 points, and related to the devaluation of the Argentinean peso, Brazilian real and Turkish lira and to a lesser extent to the Russian rubble.
Price effect, up 3.9 points, came from a more ambitious price policy and measures to mitigate devaluations.
Product mix impacted for 1.1 points thanks to ZOE sales increase.
Effect « others » weighed for -1 point notably because of lower contribution from spare parts activity, largely impacted by the confinement measures in H1.
The Group’s operating margin amounted to -€337 million and represented -0.8% of revenues (4.8% in 2019) thanks to a marked improvement in H2 (3.5% of revenues).
Automotive excluding AVTOVAZ operating margin was down -€2,734 million to -€1,450 million, which represented -3.8% of revenues compared to +2.6% in 2019. In the second half, it was positive at €198 million (0.9% of revenues).
The change can be explained by the following:
The AVTOVAZ operating margin contribution amounted to €141 million, compared to €155 million in 2019 highlighting the resilience of AVTOVAZ in the Covid-19 context.
Sales Financing contributed €1,007 million to the Group’s operating margin, compared to €1,223 million in 2019.
The contribution of Mobility Services to the Group’s operating margin amounted to -€35 million in 2020.
Other operating income and expenses amounted to -€1,662 million (compared to -€557 million in 2019) coming from significantly higher restructuring charges and impairments.
Group operating income came to -€1,999 million compared with €2,105 million in 2019 after taking into account a strong increase of charges related to competitiveness improvement.
Net financial income and expenses amounted to -€482 million, compared with -€442 million in 2019, due to higher average indebtedness.
The contribution of associated companies came to -€5,145 million, compared with -€190 million in 2019. Nissan’s contribution was negative at -€4,970 million and the one of other companies amounted to -€175 million.
Current and deferred taxes represented a charge of -€420 million compared to a charge of -€1,454 million in 2019.
Net income stood at -€8,046 million and net income, Group share totaled -€8,008 million (-€29.51 per share compared with €0.52 per share in 2019).
was negative at -€4,551 million. It takes into account the fall in operating margin, the change in working capital requirements and the absence of dividend received from RCI following European Central Bank’s decisions. On the sole second half, the free cash flow was positive at +€1,824 million due to investment management and a reverse of the change in working capital requirement, without, however, offsetting the change in the first half of the year.
The Automotive net cash position was negative at -€3,579 million at December 31, 2020 compared with a positive position of €1,734 million at December 31, 2019.
At December 31, 2020, total inventories (including independent dealers) represented 486,000 vehicles, down more than 100,000 units (-19%). It represented 61 days of sales, compared to 68 days at end December 2019.
The Board of directors will propose at the Shareholders’ Annual General Meeting, scheduled for April 23, 2021, not to pay a dividend in respect of 2020.
Groupe Renault confirms the 2023 objectives communicated in the "Renaulution" strategic plan:
GROUPE RENAULT CONSOLIDATED RESULTS
The consolidated financial statements of Groupe Renault and the company accounts of Renault SA at December 31, 2020 were approved by the Board of Directors on February 18, 2021.
The Group’s statutory auditors have conducted an audit of these financial statements and their report will be issued shortly.
The earnings report, with a complete analysis of the financial results in 2020, is available at www.group.renault.com in the "Finance" section.