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STRATEGY

Renault’s objective in 2009 was to manage an unprecedented economic crisis by rallying the entire company around a single priority: positive free cash flow. The Group met this objective by deploying a three-pronged action plan that consisted in optimizing revenues, reducing costs (including investments) and strict control over working capital requirements.

2009 Annual Results - Extracts from press conference

2009: resisting the crisis 

 

“We took the first actions to withstand the crisis as early as July 2008. Renault proved its resilience in 2009, as demonstrated by our significantly positive free cash flow. Economic conditions will remain difficult in 2010 with a 10% fall in the European market. We are continuing our work on building the Renault of the post-crisis period with the pursuit of the sales offensive in Europe, the mass market of zero-emission vehicles in 2011, the extension of the Entry-car range, the strengthening of our presence in emerging countries, and the acceleration and broadening of synergies with Nissan.”

Carlos Ghosn, Chairman and CEO of Renault

 

Bolstered by a renewed range with the launch of six new products in 2009, the Group slightly increased its world market share by 0.1 point to 3.7%, in a market that shrank 4.5% (PC + LCV). The increase was more pronounced in the second half, with a 0.2-point rise. Market share grew in 11 of the Group’s top 15 markets, which account for 85% of Group sales.

 

The working capital requirement improved by €2,923 million in 2009, with a notable 25% reduction in stocks.


Fixed costs fell 17% on 2008:

 

  • Tangible and intangible investments, which came to €2,302 million in 2009 compared with €3,385 million in 2008, were kept under control. By concentrating on priority projects, constantly striving for efficiency and optimizing synergies with Nissan, we reduced research and development expenditure by 26% and tangible investments by 30% on 2008, while maintaining essential programs.
  • Savings made at all levels of the company led to an 8% reduction in general expenses compared with 2008 and 20% compared with 2007.

 

The synergies generated within the Alliance with Nissan played an important role in the success of Renault’s free cash flow plan in 2009. The 2009 objective for total synergies for the two partners was €1.5 billion; this target was met at end-December with one quarter still to go before the end of Nissan’s financial year. A new plan has been launched for 2010, aimed at an additional €1 billion in synergies for the two companies.

The Group's priorities 

As for Renault, priorities are clear :

 

  • Being a pionneer on mass marketed electric cars and continue to offer low CO2 affordable cars. 
  • Aggressive pursue of sales development in emerging markets, especially by building on existing positions such as in Russia, India or Brazil.
  • Reinforce the leadership on low-cost cars, with the Logan platform, and continuing the development on the ultra-low cost segment as part of international development.
  • Improving the position of the Renault and Dacia brands in Europe and the Euromed Region.
  • Continuing to strengthen the Alliance, which is one of the main levers to make all these developments possible.

 

A precise and clear mid-term plan is an essential part of the Renault corporate DNA. Based on a more stable economic environment, the announcement of a new mid-term plan  is expected next year.

Outlook and priority actions in 2010 

    Renault expects economic conditions to remain difficult in 2010 with a European market that could contract by 10% versus the total industry volume of 2009. In this context, consistent with 2009, the company’s objective is to generate positive free cash flow and thus continue to reduce debt.

     

    To meet this objective, Renault will rely on four key levers in 2010:

     

    • The appeal of its product range, which will continue to be broadened and renewed with six new product roll-outs in 2010 to maintain the market share momentum of second-half 2009.
    • Enhancing Alliance synergies with Nissan.
    • The continuation of the cost reduction policy and a ratio of net CAPEX and R&D expenses kept at less than 10% of revenues.
    • Intensified actions to control working capital requirements.