2011 FinancialResults of Renault Group

Renault, the renowned automobile giant, has managed to attain free cash flow of €1,084 million in 2011 in accordance with the expectations of its mid term plan Renault 2016 - Drive the Change.

Commenting on the results, Carlos Ghosn, Chairman and CEO of Renault, said “Thanks to the hard work of all its employees, Renault coped with the different crises faced throughout the year, exceeding the free cash flow objective for 2011. The 19% increase in Group sales outside Europe, notably in Brazil and Russia, illustrates the Group’s international growth. In 2012 we expect international sales to be well in excess of 43% of the total, while maintaining the Renault brand leadership in France, and No. 2 position in Europe.”

The total Group revenues increased 9.4% to €42,628 million. Boosted by improved product mix and sales momentum, contribution of €40,679 million was made by automotive. Against 2010, 9.4% increase has been registered. Group operating margin of €1,091 million or 2.6% of revenues has been considered stable. In 2010, the same was €1,099 million and 2.8%.

Compared to 1.1% of revenues or €396 million in 2010, 0.8% of revenues or €330 million have been registered by automotive in 2011.  The negative factors like €245 million negative mix/price, €199 million unfavorable currency effect and €509 million increase in raw material’s price was not counter balanced by improvement in costs (€500 million) as part of the Monozukuri plan and sales volumes OF €455 million.

Due to Japanese Tsunami, there was limitation in the supply side. Further, the estimated €200 million automotive margin in 2011 was also affected by natural calamity. Logistics, production and commercial offers were mainly affected. Due to a historically low cost of risk and increase in loans outstanding, €58 million hike was registered in the Sales Financing contribution to Group operating margin, touching €761 million mark.

Compared to €1,289 million in 2010, associated companies contribution for 2011 has been registered €1,524 million. In 2010, net income was €3,490 million due to €2,000 million capital gain resulting from the sale of B shares in AB Volvo in October. However, €2,139 million net income has been registered in 2010, which is less than last years figure. Total net income Group share was €2,092 million as per share valued (€7.68.

Hike has also been registered in the automotive operational free cash flow due to managed operating performance, working capital requirement and investments. However, crisis like supply limitations and sovereign debt also proved as hurdle.  In spite of all these factors, €1,084 million automotive operational free cash flow has been achieved. For the third consecutive year, automotive net financial debt reduced by this performance has been of €299 million on December 31, 2011. It was down by €1,136 million.

Renault made €2 billion debt repayment of the loan from the French government in 2011 to reduce gross automotive debt. In this process, €11.4 billion automotive liquidity reserves were maintained by it as compared to €12.8 billion of 2010. Compared to 6.3% of net debt to shareholders’ equity ratio at end of 2010, 1.2% has been registered at the end of 2011.

Along with the policy announced in the Renault 2016 - Drive the Change, it has been decided that at the annual general meeting on April 27th, 2012, the company will put forward a proposal of €1.16 per share dividend for the approval of the shareholders. Per share dividend would be the depended on Group dividends due to interests in listed companies in 2011.

In the year 2012, 4% growth is expected for global automotive market from PC and LCV. However, markets outside Europe are developing constantly. Russia has registered 8% growth and 5% growth has been achieved by Brazil. It is expected that European market will shrink by 3% to 4% due to economic uncertainty. In France, there would be 7% to 8% decrease in growth.

Along with international growth, new energy engines, new launches (including Lodgy, Clio IV and ZOE), and new design identity will boost Renault sales as per the Renault 2016 - Drive the Change plan objectives. With R&D and capital expenditures ratio lower than 9% of Group revenue, positive automotive operational free cash flow is targeted in 2012.

The consolidated Group results are tabulated below:

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