FIRST-HALF 2016 RESULTS: RCI BANQUE CONTINUES TO GROW AND REPORTS A 14.4 PER CENT INCREASE IN NEW FINANCING

RCI Banque reported strong business growth in first-half 2016 with 770,305 new financing contracts, up 12 per cent first-half 2015. The overall penetration rate on Alliance brand sales increased by 0.9 points to 36.5 per cent. New financings came to €8.9 billion, for an increase of 14.4 per cent compared to first-half 2015. Average performing assets¹ rose 14.4 per cent compared to end-June 2015 to reach €31.9 billion at end-June 2016. Earnings before tax came to €431 million at end-June 2016, up 1.9 per cent. RCI Banque continued to diversify its refinancing sources in a market that remained characterised by volatile conditions. Net retail savings deposits collected in the period were up €4.8 billion, coming to €11.8 billion at June 30, 2016. They accounted for 34.1 per cent of outstandings at the end of June.

• 770,305 vehicles financed, up 12 per cent vs first-half 2015, representing €15.6 billion of new financings (up 14.4 per cent).
• Penetration rate at 36.5 per cent of deliveries, up 0.9 points vs first-half 2015.
• Average performing assets reached €31.9 billion, an increase of 14.4 per cent vs first-half 2015.
• Net banking income at €698 million, up 3.4 per cent compared to end-June 2015 and accounting for 4.39 per cent of average performing assets at end-June 2016.
• Operating expenses for 1.41 per cent of average performing assets, compared with 1.52 per cent in first-half 2015.
• An operating ratio of 32 per cent, up slightly by 0.8 points.
• Cost of risk at 0.30 per cent of average performing assets, compared with 0.31 per cent at end-June 2015.
• Earnings before tax amounted to €431 million, up 1.9 per cent compared to first-half 2015.

“RCI Banque’s results are on track with the objectives set as part of the medium-term plan. RCI Banque is confirming its profitable growth target while strengthening its strategy on sales support for the Renault-Nissan Alliance brands.” announced Clotilde Delbos, Chairman of the Board of Directors of RCI Banque.

“RCI Banque is pursuing its growth momentum at a sustained pace and is reporting a strong increase in sales performance. With more than  1.6 million services sold in the first half of the year, RCI Banque is also confirming its ambition to diversify its offers to better respond to the needs of our customers.” stated Gianluca De Ficchy, Chief Executive Officer of RCI Banque.

ROBUST SALES PERFORMANCE IN A GROWTH MARKET

The automotive market grew 3.1 per cent in first-half 2016 in the operating countries of RCI Banque subsidiaries² and the sales volumes of the Alliance brands increased 8.4 per cent, driven notably by numerous new model launches. RCI Banque continued to improve its penetration rate, which stood at 36.5 per cent at end-June, up 0.9 points compared to first-half 2015. Excluding companies consolidated for under the equity method³, the penetration rate came to 39.3 per cent (up 0.8 points year on year). The combined growth in the overall penetration rate and higher Alliance sales enabled RCI Banque to post a record volume of new financing contracts, up 12 per cent in the period (770,305 new contracts compared with 687,766 at end-June 2015). New financings increased for all Alliance brands to reach €8.9 billion, up 14.4 per cent vs first-half 2015. The services business, a major focus of the RCI Banque group strategy, continues to develop at a brisk pace, with volumes up 21.7 per cent compared to end-June 2015. RCI Banque sold more than 1.6 million services in first-half 2016, over 60 per cent of which vehicle-related.

RCI BANQUE MAINTAINS STRONG FINANCIAL PERFORMANCE

Boosted by strong growth in new financings, RCI Banque’s average performing assets increased 14.4 per cent compared to first-half 2015 to €31.9 billion.

Net banking income came to €698 million, up 3.4 per cent in the period, driven by a robust increase in financing outstandings, and limited mainly by a negative currency effect and an activity downturn in Latin America.

The cost of risk stabilized at a very good level of 0.30 per cent of average performing assets (compared with 0.31 per cent in first-half 2015). Operating expenses decreased by 11bp at 1.41 per cent of average performing assets. With an operating ratio of 32 per cent, RCI Banque is showing its ability to continue developing its business and rolling out new strategic projects while keeping costs under control.

Earnings before tax came out at €431 million at end-June 2016, up 1.9 per cent and once again reflecting impressive performance levels, despite an unfavourable currency effect of €27 million (concentrated mainly in the Americas Region).

RCI BANQUE CONTINUES TO DIVERSIFY ITS REFINANCING POLICY

RCI Banque confirmed its access to varied financing sources. In first-half 2016 it launched three public bond issues with fixed and variable coupons and maturities of respectively three, seven and three years, for a total amount of €1.850 billion. It also implemented a private placement for €300 million with a two-year maturity. Meanwhile, the German subsidiary launched a public securitization transaction backed by German automotive loans, €500 million of which was placed with investors. This combination of maturities, coupon types and issue formats is part of RCI Banque’s strategy to diversify financing sources, which it has led for several years now. Outside Europe, RCI Banque entities in Brazil, South Korea, Morocco and Argentina also borrowed on their domestic bond markets.

Deposit collection remains a significant source of refinancing for RCI Banque. At June 30 2016, net deposits collected amounted to €11.8 billion, or 34 per cent of outstandings, thus meeting the objective of achieving deposits at one-third of the financings granted by RCI Banque to its customers.

(1) Average performing assets: average performing outstandings, including operational lease assets.
(2) RCI Banque is present in 36 countries.
(3) Companies accounted for under the equity method are Russia, Turkey, India.

The Group’s statutory auditors have carried out their limited review of these accounts and their report on the half-yearly financial information is currently being issued.

About RCI Banque

Created and wholly owned by Groupe Renault, RCI Banque is a French bank specializing  in automotive financing and services for Groupe Renault customers and dealer networks (Renault, Renault Samsung Motors and Dacia) throughout the world and the Nissan Group (Nissan, Infiniti and Datsun) mainly in Europe, Russia and South America. With over 3,000 employees in 36 countries, RCI Bank and Services financed over 1.3 million contracts (new and used vehicles) in 2015 and sold more than 2.9 million services. Average loans outstanding stood at €28.6 billion of funding at end-June 2016 and earnings before tax at €844 million at end-December 2015 and €431 million at end-June 2016. Since 2012 RCI Bank and Services has rolled out a deposits collection business in four countries.  At end-June 2016, net deposits collected stood at €11.8 billion, or 34% of the company’s outstandings.

 

GROUPE RENAULT CONTINUED ITS GROWTH AND REACHED A RECORD OPERATING MARGIN IN THE FIRST HALF OF 2016

• Group revenues up 13.5 per cent to €25,185 million.
• Registrations up 13.4 per cent to 1.57 million units.
• Group operating profit at €1,541 million (+40.6 per cent), representing 6.1 per cent of revenues, compared with €1,096 million[1], representing 4.9 per cent¹ of revenues in the first half of 2015.
• Automotive operating profit at €1,121 million (+64.9 per cent), compared with €680 million¹ (4.7 per cent of revenues compared with 3.2 per cent¹).
• Group operating income at €1,476 million (+50.6 per cent) compared with €980 million¹.
• Net income at €1,567 million (+7.9 per cent) compared with €1,452 million¹.
• Positive Automotive operational free cash flow of €381 million.

“The first half results demonstrate the relevance of our strategy. Success of our new models, our regional diversification and all employees engagement have allowed the group to set a new record for its first half operating margin and to have confidence in the outlook for the full year”, said Carlos Ghosn, Chairman and Chief Executive Officer of Renault.

In the first half of 2016, Group revenues came to €25,185 million, up 13.5 per cent compared with the first half of 2015.

Automotive revenues amounted to €24,078 million, up 14.3 per cent thanks to an increase in the Group’s brand volumes (+10.6 points) and sales to partners (+3 points). The price effect was positive (+3.8 points), primarily due to price increases in some emerging markets to offset currency devaluation (-4.9 points). The mix effect is positive at 1.8 points.

The Group’s operating profit amounted to €1,541 million (+40.6 per cent), compared with €1,096 million¹ in the first half of 2015, and represents 6.1 per cent of revenues (4.9 per cent¹ in the first half of 2015).

The Automotive operating profit was up €441 million (+64.9 per cent) to €1,121 million and reached 4.7 per cent of revenues, compared with 3.2 per cent¹ in the first half of 2015. This performance can be explained mainly by strong business growth (€614 million positive impact), higher prices and an improved mix. The currency impact is unfavorable (-€432 million), mainly due to the depreciation of the Argentinian peso, the Russian rouble and the British pound. However, raw materials had a positive effect of €164 million. The positive mix/price/enrichment effect of €135 million was a marked improvement compared with the first half of 2015, thanks in particular to the success of our new models. Cost reductions were affected by the increase in R&D expenses to prepare the future, the decrease in their capitalization rate, and higher than usual start-up costs due to the large number of launches.

Sales Financing contributed €420 million to the Group’s operating margin, compared with €416 million¹ in the first half of 2015. This stable profit is related to the sharp increase in loans outstanding, but negatively impacted by adverse currency evolution and the decrease in Americas’ business. However, the cost of risk stabilized at a very good level of 0.30 per cent of the average performing assets (0.31 per cent in the first half of 2015).

Other operating income and expenses improved notably thanks to the drop in expenses related to the competitiveness plan in France. They remained negative at -€65 million versus -€116 million in the first half of 2015.

The Group’s operating income came to €1,476 million compared with €980 million¹ in the first half of 2015 (+50.6 per cent). This improvement is due to the increase in the operating profit and the reduction in other operating expenses.

The contribution of associated companies, mainly Nissan, came to €678 million, compared with €895 million^[2] in the first half of 2015. Nissan’s contribution was impacted by a one-off charge booked in Q1. AVTOVAZ contribution is negative at -€75 million versus -€87 million² in the first half 2015, despite a deterioration of the operating result.

Regarding AVTOVAZ, the group confirms its intention to take part in a recapitalization operation before the end of the year, which should result in the consolidation of AVTOVAZ as of December 31, 2016.

Net income came to €1,567 million (+7.9 per cent), and Group share totaled €1,501 million (€5.51 per share compared with €5.06¹ per share in the first half of 2015).

Automotive operational free cash flow was positive at €381 million after taking into account a negative change of €129 million in the working capital requirement.

At June 30, 2016, total inventories (including the independent network) represented 60 days of sales, compared with 66 days at end-June 2015.

OUTLOOK 2016

In 2016, the global market is expected to record growth around 1.7 per cent compared to 2015. The European market, as well as the French one, are now expected to increase by at least 5 per cent.

Outside Europe, the Brazilian and Russian markets are expected to decline: -15 per cent to -20 per cent for Brazil and -12 per cent for Russia. On the contrary, China (+4 per cent to +5 per cent) and India (+7 per cent to +9 per cent) should pursue their positive momentum.

Within this context, the Renault Group (at constant scope of consolidation) confirms its full-year 2016 guidance:

• Increase Group revenues (at constant exchange rates)
• Improve Group operating margin
• Generate a positive Automotive operational free cash flow

GROUPE RENAULT CONSOLIDATED RESULTS

€ million	H1 2016	H1 2015 restated	Change	H1 2015 published
Group revenues	25,185	22,197	+2,988	22,197
Operating profit % of revenues	1,541           6.1%	1,096        4.9%	+445             +1.2points	1,069 4.8%
Other operating income and expenses items	-65	-116	+51	-116
Operating income	1,476	980	+496	953
Net financial income	-67	-161	+94	-161
Contribution from associated companies	678	895	-217	912
o/w : NISSAN	749	979	-230	979
AVTOVAZ	-75	-87	+12	-70
Current and deferred taxes	-520	-262	-258	-235
Net income	1,567	1,452	+115	1,469
Net income, group share	1,501	1,379	+122	1,396
Automotive operational free cash flow	+381	-52	+433	-95

ADDITIONAL INFORMATION

The condensed half-year consolidated financial statements of the Renault group at June 30, 2016 were approved by the Board of Directors on July 27, 2016.

The Group’s statutory auditors have conducted a limited review of these financial statements and their half-year report will be issued shortly.

The financial report, with a complete analysis of the financial results in the first half of 2016, is available at www.group.renault.com in the Finance section.

 

([1])Taxes, which satisfy the definition of tax based on a notion of net intermediateincome within the meaning of IAS 12 “Income Tax” and which were previouslypresented as operating expenses, have been reclassified under current taxes from2016 and conversely for taxes not satisfying the definition of tax based on netintermediate income. The presentation of the financial statements for the 1^st half of theyear and for 2015 were restated accordingly.

([2]) Since December 31,2015, the AVTOVAZ accounts are included in the Group’sfinancial statements without any three-month lag, therefore, the previously publishedfigures for the 1^st half of 2015 regarding AVTOVAZ are restated so that the 1^st half of2015 covers the calendar period from January 1 to June 30.