Tougher-than-expected European market, but continued international growth
Sales results: Q3 2012 highlights
In a world automotive market that grew 5.5%, Renault group sales totaled 596,064 units in third-quarter 2012, down 5.8%, in the context of a difficult European market in general and French market in particular. However, the Group continued to grow internationally with units sold up 7.7%.
In Europe, where the market continued to contract (down 9.3%), Renault group sales fell 18.4% (8.5% market share), owing to a disadvantageous geographical mix that resulted from strong market downturns in France (-11.7%), Italy (-23.3%) and Spain (-18.9%). Sales performance in France was impacted by the peak in activity over the same period in 2011, with the delivery of vehicles that could not be produced earlier following the tsunami in Japan. The Group also suffered the effect of its business restructuring in the UK and its price policy in Europe.
Before the launch of Clio IV this month, the Renault brand ranked number-three in Europe with a 6.8% share (down 1.2%) of the passenger car (PC) and light commercial vehicle (LCV) market. It confirmed its leadership in LCVs with market share of 13.9% (-0.8 points).
The Dacia brand posted a 1.7% share of the PC + LCV market, up 0.3 points year on year.
Outside Europe, the Renault group confirmed its sales momentum. For the first time, over half of Group sales were made outside Europe (55%, up 7 points).
In the Americas Region, the Group reported a 19.7% rise in sales in a market that increased 8.6%. Brazil, where sales were boosted by government incentives, confirmed its position as the Group’s second market. Renault market share in the country rose 0.9 points to 6.7% on a 34.5% increase in sales. In less than one year Duster has become a leader in its segment.
In the Eurasia Region, despite temporary industrial constraints, sales were up 12.4%, in line with the market. Russia confirmed its position as the Group’s third market.
In the Euromed-Africa Region, sales rose 4.0% in a market that grew 9.8%. The Group extended its leadership in Algeria with a 26.8% share of the market (up 1.4 points), but saw its share in the Turkish market fall 3.6 points (to 13.6%), namely owing to the discontinuation of diesel-powered Symbol sales.
In the Asia-Pacific Region, Group sales fell 8.4% in a market that rose 7.1%. Duster got off to a very good start in India, which became the Group’s number-fifteen market (1.6% market share). The Group continued its restructuring plan in South Korea.
Q3 revenues by activity
Group revenues in third-quarter 2012 came to €8,447 million, down 13.3% (2) (-13.3% too excluding currency effects).
Automotive revenues fell 14.4% to €7,928 million. The year-on-year fall in Group sales and network stock reduction contributed 16.3 points to this downturn (including a change in geographical mix of -0.7 points). The mix/price impact was positive at 3.1 points, owing mainly to a determined policy to defend unit margins in Europe and a rise in prices internationally. Currency effects were neutral. The remaining -1.2 points came from other activities, including -1.0 points from sales of built-up vehicles, components and powertrain parts to partners stemming from European market decline.
Sales Financing (RCI Banque) contributed €519 million to Group revenues, up 6.8% on the same period in 2011. Average loans outstanding came to €24.3 billion in third-quarter 2012, up 6.3%. The number of new financing contracts fell 2.3% to 229,699 over the quarter.
The Group’s refinancing activity continued in the third quarter. The Automotive borrowed more than €800 million with medium-term maturities, including a €600 million issue of five-year bonds and an initial two-year “dim sum” issue worth 750 million Chinese yuan (€92 million). RCI Banque made two bond issues for a total €124 million, one, its first-ever in Norwegian krone for 500 million, and another one in Korean won for 80 billion. RCI Banque also made three private placements for a total €160 million and securitized a portfolio of Italian loans for €300 million.
Recent European market trends drive us to cut our total industry volume forecast in the Region from -6% to -7% in July 2012 to -8% at best and for France from -10% to -11%, to -13% at best. As a reminder, at the beginning of the year European market was expected down -3% to -4% with a French decline of -7% to -8%.
In such an environment and despite solid development outside Europe, the Group’s full year volume would fall short of last year’s level.
Renault group maintains its positive 2012 Automotive operational FCF target. However, the continuous deterioration of the European market remains a source of concern.
Renault group consolidated revenues
(1) Operational free cash flow: cash flow (excluding dividends received from listed companies) minus tangible and intangible investments net of disposals + /- change in working capital requirement.
(2) On a like-for-like basis, Q3 2011 unchanged