Earnings Call: Q4 2016

Feb 10, 2017

Good morning, everyone, and welcome to Renault's Fiscal 2016 Results Presentation and Conference Call. It is broadcast live and will be available on replay on our website. The presentation file, press release, and activity pack for this call are all available on our website in the finance section. I would like to point out the disclaimer on slide 2 of this pack regarding the information contained within these documents, and in particular, about forward-looking statements, and I invite all participants to read this. Today's meeting is scheduled to last about 1 hour and 15 minutes. As usual, we have two key speakers today. First up will be Clotilde Delbos, our CFO. She will take you through the highlights of our financial results, and then Renault's Chairman and CEO will share his review of 2016, and then the outlook for 2017 and beyond. The presentation will last about 30 minutes and will be followed by a Q&A session. Clotilde, I will turn the presentation over to you. Good morning, everyone. Thanks to the success of our new models, but also to a supportive environment in Europe, I am pleased this morning to report that we have achieved or exceeded all our targets for 2016. Our revenues were in excess of EUR 51 billion for the first time, and our operating margin was a record 6.4%. Before getting into the financial results, I would like to start with a quick summary of our commercial results on slide 5, which we released on January 17th. For simplification, in my review of the year, when I refer to the automotive division, this means automotive excluding AvtoVAZ. Group sales increased 13.3% to 3.18 million units. This performance was achieved during the continuing recovery in the European market and despite still challenging conditions in some emerging markets. In this environment, our business outside Europe was the stronger driver for our growth, with an annual increase of 15.3% in our registration, while in Europe they were up 11.8%. Globally, our registration outside Europe represented 43% of our total sales, compared with 42% in 2015. All regions outside Europe posted positive results in terms of registrations. The main positive driver were the Africa, Middle East, India region, up 36.4%, and the Asia Pacific region, up 34.5%. This performance came primarily from the success of our recently launched vehicles. In the AMI region, our performance came from the ongoing success of Kwid in India and our growing performance in Iran. In the Asia Pacific region, we benefited in China from the launches of our first locally produced vehicles. We started in Q1 with Kadjar, our new C-segment SUV, and then we launched the new Koleos in Q3, replacing the previously imported one. In Korea, we are seeing a good performance from the SM6 and a strong start from the QM6. In the Eurasia region, our registrations were up 2.3% in a market down 6.3%. Our performance in Russia was at -2.6% in a market down 10.8%, while Turkey and Romania showed positive contribution. In the Americas region, despite declining demand, we managed to increase our market share thanks to a good performance in Argentina and the overall success of our lineup. Let's turn now to slide six, which shows group revenues. In total, group revenues reached EUR 51,243,000,000, an increase of 13.1%. Revenues for the automotive division increased by 13.7% in the period to EUR 48,995,000,000. Revenues from our captive sales finance company, RCI Bank, increased by 1.3% to EUR 2,248,000,000 in the period. The automotive revenue variance analysis is shown on slide seven. Starting on the left of the page, the first item is volume, showing a positive impact of 8.9 points. This is below our registration increase, but as you know, our new car business typically represents about two-third of our automotive revenues. In addition, if our inventory levels were up, part of our growth derived from our CKD business in Iran and China, which are not captured in the volume effect. The geographical mix impact is a slight positive of 0.2 points and reflects lower growth in regions with below groups average price per unit, like Americas and Eurasia. The third item to note is the model mix effect. The impact was positive by 0.7 points, contributing EUR 312 million. This results from the positive impact of our recently renewed models in Europe, but mitigated by the success of Kwid in India, which sells for a significantly lower price than the group's average. Please note that the change in the trend for these two last items, compared with what we shared with you in our Q3 numbers, came from the fact that Kwid started to impact in Q4 2015. The fourth item is the price effect, which is positive by 3.9 points and in line with what we reported for the first nine months. This impact came primarily from the better pricing enjoyed with our new European products and still partly from the carryover of the price adjustments made earlier in emerging markets. Sales to partner continued to be a significant driver. During the period, this item contributed 2.5 points or EUR 1,099,000,000. The success of the Nissan Rogue in the U.S. supplied partially from our Korean plant in Busan, and the strong growth of our CKD business explain this performance. Please note that there was almost no impact from the Nissan Micra production that started at the end of the fourth quarter. The next item, foreign exchange, impacted negatively by EUR 1,686,000,000 or 3.9 points. This is a slightly less negative impact than in the previous quarters, as some currencies from emerging markets had easier comparables. The last item, others, was a positive 1.4 points. This represents other activities outside the scope of new car activity, mainly spare parts, our wholly-owned dealer business, and buyback restatements. I will now turn from automotive revenues to the group operating profit by activity. In 2016, the automotive operating profit grew 54% to EUR 2,386,000,000, versus EUR 1,546,000,000 in 2015. We continued to improve our automotive margin in the second half, exceeding 5% versus 4.7% in the first half. On the full year, the automotive operating margin came to 4.9%, a 1.3 point improvement. RCI Bank delivered an 896 million EUR contribution to group earnings, an improvement of 8.1%. In total, for 2016, the group's operating profit showed a robust 907 million EUR improvement at 3,282,000,000 EUR, giving a group consolidated operating margin of 6.4%, compared with 5.2% in 2015. This set a new margin record for Renault and well exceeded our 5% target. Let's see this in more detail. Slide 9 shows the main variance that explains this increase. I will start the walk down reading left to right. Cost reduction activities contributed positively for 272 million EUR. As we told you when we published our Q3 results, our Monozukuri activities, impacting positively 184 million EUR for the full year, have been penalized by costs related to overheated demand and launch costs. In addition, we have decided to increase our R&D spending, both in terms of new technologies and additional products. Looking at cost reduction in more detail on Slide 10. Excluding the raw material impact, saving from purchasing were higher than in 2015 at 656 million EUR, showing a strong performance from our team. Warranty costs impacted negatively by 101 million EUR, compared with a positive 197 million EUR in 2015. These indicators swung back from after the unusually positive performance booked in the prior year. R&D contribution negatively contributed negatively by 216 million EUR as we significantly increased our spending primarily to continue our product cadence. It's worth noting that our capitalization rate decreased again to reach 35.7% versus 39.5% in 2015. Manufacturing and logistics costs had a negative contribution of 111 million EUR. As I said, this came from the ramp-up costs and the depreciations linked to the new models and the additional shifts needed to meet demand. We also faced higher logistic costs due to supply chain constraints. G&A also impacted negatively for 112 million EUR versus minus 64 million EUR in H1. Turning back to the operating profit walk down on Slide 11. Raw materials provided a positive of 331 million EUR versus 61 million EUR in 2015, as commodity prices continued to fall for most of 2016, but started to reverse at the end of the year. It is more than likely that this will become a headwind this year. Mixed net enrichment impacted positively by 115 million EUR versus a negative impact of 379 million EUR last year. This reflect the impact of our new product in terms of pricing, but also lower price increasing in emerging markets in H2 as currency were less adverse. Moreover, this indicator has been negatively impacted by advertising costs related to the high numbers of launches that occurred in the year. Volume and sales to partner delivered a positive 1,036,000,000 EUR, reflecting the strong increase of our registrations and CKDs. RCI Bank and other businesses accounted for plus 55 million EUR. This results mainly from the positive 104 million EUR contribution from RCI before Forex impact, as I will detail later. Finally, currency was a significant negative, amounting to 702 million EUR, and reflects primarily the negative impact of the Argentinian peso and the British pound. Continuing on through the P&L with the other operating income and expenses item on slide 12. This year, this item amounted to a profit of EUR 1 million, resulting from positives and negatives. On the positive side, we booked a EUR 325 million profit stemming from the accounting impact of the first full consolidation of AvtoVAZ. On the negative side, we booked charges related to restructuring and to the new multi-year agreement signed with our unions in France in January. These are the two main factors explaining these results. After taking into account these expenses, our EBIT line amounted to EUR 3,283 million compared to EUR 2,176 million in 2015. Continuing down the P&L, the next item is net financial income and expenses. The net charge increased EUR 102 million at EUR 323 million, due essentially to a change in the mix of our debt in South America, which carries a higher cost. The next slide, number 14, shows the impact of associated companies in Renault's P&L. Nissan contributed EUR 1,741 million to our 2016 result. This was EUR 235 million less than prior. I remind you that Nissan's contribution has been negatively impacted by one-off charge related to an airbag supplier. Renault's share in AvtoVAZ result came to a negative EUR 89 million compared to a loss of EUR 620 million in 2015. The EUR 531 million improvement came partly from AvtoVAZ operating performance, but mainly from the reduction in impairments booked this year compared with the year before. For the last time, AvtoVAZ results are shown in the associated companies, as the P&L will be fully consolidated from 2017 onwards. I will turn back to the P&L on slide 15, where the net tax charge for 2016 came to EUR 1,055 million, compared with EUR 366 million in 2015. This rise reflects primarily the increase in our pre-tax profit, notably in France. We also booked some deferred tax asset adjustment, partly following a change in accounting and tax rules. Bottom line, net profit after tax increased significantly at EUR 3,543 million, almost EUR 600 million more than in 2015. Net income over revenue reached 6.9% in 2016. After taking into account minorities, the net result per share came to EUR 12.57 versus EUR 10.35. Now that I have completed the analysis of the P&L, I will turn to slide 16, which shows the change in the net automotive cash. Cash flow from operations totaled EUR 4,362 million, a EUR 911 million improvement reflecting higher operating profit. Change in the working capital requirement impacted positively by EUR 356 million, despite an increase in inventories. Net tangible and intangible investment came to EUR 3,611 million. This is EUR 530 million higher than in 2015. This expected increase is mainly explained by CapEx and leased vehicles. As a result, automotive operational free cash flow came to a positive EUR 1,107 million. Regarding dividend flows, dividends received from quoted companies in the period totaled EUR 772 million, while dividends paid during the year amounted to EUR 794 million. Nissan share buyback brought EUR 1,119 million. Other financial items were a negative EUR 940 million, resulting primarily from AvtoVAZ recapitalization, but also from other smaller acquisition and value adjustments of currencies. The AvtoVAZ consolidation impacted negatively for EUR 1,205 million, our net financial position. In summary, net automotive cash, including AvtoVAZ, increased by EUR 59 million and came to EUR 2,720 million. Slide 17 shows you the status of our inventories at the end of the year, excluding AvtoVAZ. Inventories increased over last year a bit faster than ourselves, and we are now almost at our 60-day guidance. Global stock represented 59 days of supply at the end of the year, versus 55 days at the end of 2015, which was a bit low. We are comfortable with the current level, which should allow us to have a good availability of cars to start the year. I would now like to move to the automotive liquidity reserve situation on slide 18. Cash and cash equivalent totaled EUR 11,800 million at the end of December, a slight increase compared with the end of 2015. Together with the fully available undrawn credit lines, the automotive gross liquidity reserve increased EUR 200 million and stands at EUR 15,100 million at the end of 2016. I would now like to take a few moments to give you a bit more details on RCI Bank's performance on slide 19. New financing in the period increased by 15% at EUR 11,900 million, primarily reflecting the strong activity in Europe and the rise in the penetration rates on new vehicles. Average performance asset grew 16% at EUR 33.3 billion. Net banking income stood at 4.41%, down 34 basis points, reflecting the increase of the European business, where margins are usually lower than in emerging markets such as Brazil. In addition, the net banking income has been penalized by a negative Forex impact coming mainly from South America. The cost of risk stayed at a record low, with 31 basis points of average performing assets versus 33 basis points in the prior year. Finally, costs were contained, keeping our operating expenses ratio at 1.39% of average performing assets, or eight basis points below 2015. In total, the pre-tax return on assets reached 2.74% versus 2.97% in 2015, while return on equity reached 18.2% versus 18.7%. As you can see on slide 20, RCI Bank's dependence on the capital markets continued to reduce with the successful development of our retail online bank deposits deployed in four European countries. At the end of December, total deposit amounted to EUR 12,600 million. This source of funding represented 33% of group net outstandings, in line with our target. This completes my financial review for 2016, and I will now pass the floor to Mr. Ghosn. Thank you and good morning to everyone. I will first share my assessment of 2016 achievements before commenting on the outlook for 2017 and beyond. 2016 was a very good year for Renault. We achieved record growth, record profitability, and a record cash position. For the first time, Renault delivered record results two years in a row. As you have just heard, our 2016 revenue came to EUR 51.2 billion. Our operating profit margin reached 6.4%. Finally, thanks to continued effective financial discipline, our operating cash flow came another year to more than EUR 1 billion. These record results will allow us to significantly increase our dividend to EUR 3.15 per share, subject obviously to approval by the next annual general shareholder meeting. With 3,180,000 vehicles registered in 2016 before, as you know, the consolidation of AvtoVAZ, this means 374,000 more than in 2015. Renault became the number one French automotive group worldwide. Our sales volume and market share were up in all the regions, as you've seen. The Renault brand also kept its position as the world's leading French automotive brand and ranked second in Europe. Finally, the alliance, which now extends to Mitsubishi Motors, sold more than 9,960,000 vehicles in 2016, which is a 170,000 vehicle gap from the leader, if I exclude all the heavy trucks, which have been computed by all the car makers who are having this activity. What are the main takeaways for 2016? Continuing the momentum initiated in 2015, we launched 10 product premieres that further expanded or thoroughly renewed our lineup. New Megane and New Scenic successfully completed our C-segment renewal, and in the D-segment, global sales rose to more than 145,000 units, an increase of 74%. Our crossover range was extended to meet emerging market needs. We adapted the features of our crossover Captur to fit the Russian and the South American market. We also designed Kadjar and Koleos particularly to meet Chinese customer expectations. In line with our global expansion strategy, we entered the LCV pickup truck segments for the first time. After launching the half-ton pickup Duster Oroch in 2015 in Brazil, we launched the one-ton pickup Renault Alaskan. The addition of Duster Oroch increased our LCV sales volume in Latin America by more than 50% at 60,000 units. Another milestone was obviously the consolidation of AvtoVAZ. As planned with our partner Rostec, we took part in the public offering for the capitalization of AvtoVAZ in December 2016. AvtoVAZ has just launched a new midterm plan to revive its operating and financial performance. With this plan, which includes the renewal of the Lada brand lineup, we expect AvtoVAZ to return to operating profitability by 2018 in a Russian market that should get back to the 2 million unit mark by 2020. I remind you that the market share of the alliance brands, Lada, Renault, Nissan, Datsun, totals today 33% in Russia, which represent obviously a great potential of growth for us with the market recovery. 2016 was a strong year, but the roots of its achievements date back further in time. Last year's results contain many years of efforts and discipline that we had laid out in our strategic plan, Renault Drive the Change. Our Drive the Change plan was designed to reach two key goals to be measured in 2017, as you know, delivering EUR 50 billion in revenue and improve profitability to a minimum of 5% operating margin. Both objectives are overachieved a year ahead of schedule. In 2010, which for the record was our reference year, our revenue was EUR 38.9 billion, and our operating margin was 2.8%. In addition, we had, at that moment, EUR 1.4 billion of net financial debt. Six years forward, it's fair to say that we have come a long way, and we did so in a challenging environment. For example, during our plan period, currency rates were adverse by EUR 2 billion in operating profit, and local crisis hit some key emerging markets, at least for us, such as Russia, Brazil, Argentina, and Iran. What drove us was to grow our performance in a sustainable way. We worked on the basics. We focused on developing strategic assets in a sound financial approach that will sustain our growth and profitability in 2017 and beyond. Let me point out a few strategic levers we worked on. The first one is obviously product renewal and lineup expansion. In the past six years, with a global portfolio of 38 vehicles, we had 32 product premieres, including a range of electric vehicles. We both enriched and expanded the product range, entering new segments like crossovers, pickup truck, as well as establishing our presence in new markets. By doing so, we achieved a more diversified product mix and a much better balanced regional mix. A better regional footprint is our second lever. In 2010, our sales exceeded 100,000 units in eight countries, five of them European. In 2016, sales exceeded 100,000 units in 11 countries, including Brazil, Russia, Turkey, South Korea, and Iran, and new ones such as India. We achieved this more balanced regional mix partly because we kept investing despite local crisis. In Latin America, we achieved record market share in Brazil in 2016, despite a drop of 20% in the market. In Iran, we recovered our 2012 sales volume at almost 110,000 vehicles and gained 3.5 points of market share. Our growing presence in emerging markets is also a result of our long-term strategy of investment in local production and with local sourcing. This is crucial to the cost competitiveness of the company. From 2010 to 2016, we built plants in Tangier, Morocco, Oran, Algeria, Wuhan, China, and launched our first common alliance plant in Chennai in India. We also carefully adapted our vehicle to each market need. Instead of trying to sell European cars to everyone, we developed regional technical centers to ensure we had the right cars with the appropriate level of localization in order to be competitive in the local markets. Kwid, for example, was designed and built in India with a localization rate of 97% and will be adapted to suit other markets, starting with Latin America already in 2017. Third level is sales to partners. We expanded our business organically as well as through our partnership. From 2010 to 2016, Renault sales to partners contributed 40% to the growth of group revenues. The correlated increases in production accelerated the improved competitiveness of Renault plants. We just started the production of the Nissan Micra in Flins in France, and are continuing production of the Nissan Rogue in our Busan plant in South Korea. In Sandouville, Renault builds light commercial vehicles for General Motors and Fiat, and we continue to produce the Mercedes Citan in Maubeuge on the same platform we use for the Renault Kangoo. The combination of sales growth, cross manufacturing, and strict capacity management allow us to reach a utilization rate of 100%, using obviously the conventional industries standard, which is obviously a performance unprecedented for Renault. Fourth level is scale. During the past six years, development of shared platform helped us build more cars in more countries at a lower cost and with a lower investment. To reduce our R&D costs, we developed a modular design approach, allowing the same parts to be integrated into different vehicles. In 2016, CMF platform parts accounted for 60% of vehicle costs, compared to less than 10% at the start of our plan. 75% of engines used by Renault are shared within the alliance. Kwid in India is built on the alliance CMF-A platform, launched in Chennai and shared with the Datsun brand. We just localized it in our Renault plant in Curitiba, Brazil, to start production of the South American version. Another example is our C and D platforms, which are now one alliance platform on which we build both Kadjar and Koleos in China, and obviously other vehicles in Europe and South Korea. Fifth level, I have to mention our agreement with the trade unions. They were essential in reestablishing our competitiveness, particularly in Europe, and will continue to be. In France, our 2013-2016 agreement resulted in an increase of 50% in local production. We also hired three times more employees than committed in the agreement. Last month, we renewed our multi-year agreement with the signing unions. Over the next three years, we will invest EUR 500 million to improve our industrial performance and working condition in France. By 2019, we will hire another 3,600 employees, starting this year with 1,800 recruitments. Shared platforms, better use of industrial capacities, increased communalization boosted our competitiveness and contributed to cost reduction, which was another major level of the plan. Over the past six years, EUR 3 billion were delivered from monozukuri activities, especially from purchasing. We worked across the entire vehicle value chain, from product definition through engineering, manufacturing, suppliers, and logistics. For instance, in 2016, our local sourcing rate improved to 80% in India and China. It exceeded 60% in Russia, which is a leading position in a market where localization has been traditionally difficult for all car makers. In 2016, our performance was lower than it was in previous years. This is due to a EUR 260 million increase in R&D, which is due to our strategy to pursue all technological innovation and take all opportunities in product expansion as they arise, and as long as engineering capacities allow. Another adverse factor was increase of warranty costs and recall costs due to higher internal imperatives on quality and customer satisfaction. As planned, part of what we saved from monozukuri activity was reinvested in product competitiveness. When renewing our lineup, we invested in what creates value for customers. We made significant efforts on design, which became the number one reason for purchase. We are the first to invest in electric vehicles and became leaders in the European market. Our current range is the most competitive in scope, including light commercial vehicles and in price. The new Zoe Z.E. 40 offers the best range among mass market EVs and remains the most affordable electric car. We also introduced technological innovation into our vehicle from the B to the D segment, with new features such as multimedia touch panels, Media Nav, and R-Link. For our upper range, we focused on customer experience, and we upgraded our offer with Multi-Sense and 4Control technology, both improving driving pleasure and driving comfort. Product enrichment was key to the strengthening of our position in Europe. With an enhanced product line-up, we were well positioned to benefit from the rebound in the European market, as shows our market share, which increased to 10.6%. Renault Growth is now more global, more sustainable, and more profitable. I now give you an outlook for 2017. Let's start with opportunities and risks. There are three major opportunities. The first one is the full impact in 2017 of the 2016 product renewals, plus the 2017 product momentum with two important product premieres, Alpine and Duster. Duster, which as you know, is the most sold car of the company. In total, there will be 11 product events around the world. Second, obviously, our alliance synergy, and I would say our extended alliance synergy, because you have the development of the synergies with Nissan, but also you have the new synergies coming with Mitsubishi. We confirm anyway our target to reach EUR 5.5 billion by 2018. This is taking consideration only the Nissan perimeter. Third is the recovery in emerging markets, particularly countries which were at a very low level and where we have been building our presence for many years, such as Russia, for example. On the side of risks, the first one is obviously raw materials. We expect pricing headwinds throughout the year. Second are the Brexit uncertainty and the potential depreciation of the British pound, which might accelerate the expected drop of the U.K. market. Finally, the third risk is uncertainty surrounding existing trade agreements. Moving to our guidance for 2017, we expect the global market to grow 1.5%-2%. The European market is expected to increase by the same amount, with the same level, 2% increase also for France. Brazil and Russia are expected to be stable, while China will continue to grow at +5% and India at +8%. Within this context, and including AvtoVAZ, Renault is aiming to increase group revenues, obviously beyond the impact of AvtoVAZ at constant exchange rates, increase group operating profit in euros, and generate a positive automotive operational free cash flow. Beyond 2017, I would like to share a few brief thoughts. Our industry, as you know, is going to witness a lot of disruptions, both in terms of products and services, and consequently also in term of organization and management. By 2030, a lot are expecting electric vehicles to account for 25% of new cars sold in urban areas, and virtually all vehicles will be connected to the internet. It's no surprise for you if I say that the car of the future will be electric, autonomous, and connected. On top of those disruptions, customers will expect cars to remain attractive, competitive, safe, and fun to drive. Of course, the regulatory framework will evolve, and will probably become more strict and more demanding. The alliance, with the addition of Mitsubishi Motors, now represents one car in nine sold worldwide. Going forward, its scale will help us to competitively address these new challenges and changes without compromise. Beyond scale, which is necessary but not sufficient, and where we have a handicap to nobody and an advantage over many, our management, our organization, and our human capital will also need to change and evolve and will be vital resources. Our Drive the Change plan ended in 2016 ahead of schedule with a perfect scorecard. It was designed to address Renault challenges and reposition the company on a more competitive foundation. It is on that foundation that our new midterm plan will continue to build Renault future. We aim to continue along a path of strong, sustainable growth with our sights to achieve EUR 70 billion in revenues with a margin higher than 7% by the end of the next six-year plan. All of this while maintaining an annual positive free cash flow every year. Sustainability of performance, both in term of growth and profit, is the key objective of the next plan. We are currently working within the alliance with Nissan and Mitsubishi Motors to develop our technologies hand in hand and to extend our synergies. This will form a cornerstone for all of our next generation products and services. in October, we will share the specifics of the Renault midterm plan, which will run through 2022. This plan will guide Renault and its partners within the alliance throughout the next 6 years, taking their geographical expansion and line-up extension a step further. Renault fully delivered the commitment of the current plan a year in advance. You can expect Renault and alliance to continue to perform with the same determination for the years to come. Thank you for your attention, and now we are ready for your questions. It is working? Yes, thank you. As you know, we have got people on the call, so we are going to get some questions first from the room, and then we will alternatively get some question from the call. We are going to start with the room. Thomas? Hi. Thomas Besson, Kepler Cheuvreux. Two questions, please. One for you, Mr. Ghosn, and one for Mrs. Delbos. Mr. Ghosn, can you give us a bit more color on the prospects for Russia, both for Renault on a standalone basis pre AvtoVAZ, and now that you have AvtoVAZ within the group as well? From a financial standpoint, the market seems to have taken very negatively this takeover for the time being. Can you give us an idea of the magnitude of the earnings swing between 2016, 2017 and 2020, 2021? Is it reasonable to think it could be EUR 400 million, EUR 500 million, EUR 600 million or a substantial share of your operating profit today? Okay. Well, obviously that the market is taking negatively the acquisition of AvtoVAZ, I can understand that. I can understand that because when you look at the short term, only at the short term, it is a lot of risks. But we made a strategic decision to consider a strong presence in all the emerging market, and we are addressing them one by one. We addressed Brazil, we addressed India, we are addressing China, and we addressed Russia. And we think in Russia, we have a substantial upside coming. So for the moment, you are seeing nothing, and that is what is good about the results is we are showing you record results in 2016 with a lot of engines which do not start to work. Russia did not contribute anything to the performance of the company. Brazil, and contribution of Brazil was really minor. Contribution of India also in term of profit is still minor. China, as you know, we started. For the moment, what you are seeing is a very minor contribution from emerging market and very strong contribution from Europe. That is the bottom line that you are seeing today. Obviously, the next plan is Europe continue to perform, but all these engine should come to work one after the other. Let me talk about Russia. Russia, for me, is the biggest potential of additional profit for the company. Why? Because Russia, let us not forget, obviously, we do not share with you profitability per region, but I can tell you that before the crisis, Russia, for Renault, was the most profitable market in term of operating margin per country. The most profitable by far. For us, and now particularly through this crisis, as you know, a lot of car makers have left Russia, or they have downgraded their operation in Russia, while we have invested heavily in Russia, and we have modernized. In a certain way, we have eaten our rotten bread. Okay? Now that the Russian market seems to stabilize, we hope that with the recovery of the raw material, the recovery of oil, the probably lift of the sanctions on the Russian economy, which is foreseeable, I do not know when, but which is foreseeable, you are going to have a recovery of the Russian market. With the recovery of the Russian market, with a modernized product, heavily localized, competitively localized, and Lada put back on track, you are going to have, in my opinion, a profit, a cash machine starting in Russia. I can understand that for the moment you are seeing only risk. You are saying, "Oh my God, it is unprofitable. You have a lot of provisions." I can understand that. But my duty is to prepare the engines of the future, and this is one of them. Okay? I do not think you are going to see anything substantial in 2017. You may not see anything substantial in 2018 because our plan that we shared with you is AvtoVAZ to come back to operating profit neutrality in 2018. But I can tell you that after that, Russia should become a very strong contributor to the profitability of the company, not only in margin per unit, but particularly with the volume that we will have. We have 33% market share today. We think we have a shot at 40%. This is number one. Second, this market today is at a very low level, we can reasonably say. If any recovery is going to be particularly beneficial for us. Let us not forget that we have one of the most modern lineup in Russia. Plus, we have the highest localization rate between all car makers, which put us a substantial advantage for the future. I agree with you, Russia has been a bad story. Every time something happen Russia, we know our share take a hit. We know that. But this is part of the things we need to do in order to prepare for the future. Hopefully you will see that with the performance of Russia coming, all these efforts that we have done were worth it. Great. Thank you very much. Two small questions for you, Clotilde. First, in your cash work, you have a line for leased vehicles that has gone up by more than EUR 200 million. It's almost exactly what misses versus my free cash flow estimate. Can you explain why it went up, and how much we should expect in 2017, 2018? The second small thing that surprised me is the tax you pay on 2016 earnings. Why did it jump so much? Should we expect the tax rate to remain much higher in 2017-2018, or is there something specific that explains the jump in 2016? Thank you. Thank you, Thomas, for your questions. On the leased vehicles, I think it's a market trend as you might have seen. A lot of customers are not buying cars anymore, but more going to rental, and we are following this market trend. As many other competitors, we have more and more leased vehicles, and that's the reason why you have a bigger adjustment in our cash flow than you used to have in the past. I don't see any reason why this trend should stop. In my view, it's on the contrary, a trend that is going to continue. That's for the leased vehicles. On the tax, it's true that we have a big tax charge over the year. There are many reasons, as I mentioned in my speech, for that. First, obviously, as Renault is more and more profitable and has increased its performance in every country, our current tax burden is getting over this year, and that is quite normal, and it's also true for France. We are now a taxable, I would say, in France. The second reason is mostly from what I already explained at the end of June. We have taken into account already in the first half of the year, the clarification that were given in the norms, IAS 12, if my memory is correct, that has led us to better allocate, I would say, the deferred taxes between P&L and balance sheet. That is the main impact. Plus, on top of it, you know that in France now, there is a new law that whenever you're taxable, even if you have deferred taxes, you have to pay a portion. You can only allocate 50% of your deferred taxes to what you have to pay. Those are the main reasons why the tax charge is so high this year. The percentage should go down to something, I would say, around 30% in the future years. Okay. We are going to take the next question from the call. Who is online? We have a question from Charles Winston from Redburn. Sir, please go ahead. Yeah. Hi, good morning. It is Charles from Redburn here. Two from me as well, if you do not mind, both aimed at Clotilde Delbos. Could we talk a little bit about the balance of FX pricing and enrichment content in perhaps 2017 and 2018? I know it is very difficult. Obviously, there is a lot of uncertainty about currency, but it has been a big, significant influence. A lot of the regulatory content, one would imagine that impact is perhaps easing a little bit after two difficult years. Is that still going to be a positive influence in terms of profitability? In other words, pricing net of content still being accretive? The second question relates to Monozukuri. Again, you talked about there being a number of one-time factors restraining the contribution in 2016. Perhaps, could you give us a little bit of thinking about how that might develop in 2017 and 2018 as well? How much might that net figure rebound as some of those one-time items fall away? Thank you very much indeed. Okay. Well, Clotilde, I am going to let you answer the first question about enrichment pricing, et cetera, but let me address the Monozukuri first while you are preparing. Can you put the chart of the Monozukuri evolution, where we see all the costs? Because obviously, you can look at this and look Monozukuri cost and say, "Oh my god, these guys are fat cats. They are sitting down and enjoying growth, but they are not doing anything in term of cost." Can we have it? Yeah. Let me give a little bit of explanation about what happened in 2016 and what may happen in 2017 and 2018. That is it. Okay. So we have it. We cannot have it on the big screen? No. Okay. That is fine. Okay. All of this, at the end of the day, you end up looking at a number which is, well, not remarkable. What happened here? First, EUR 101 million on warranty. In a certain way, as you know, we have a head of quality, which is today at the executive committee, has full power to block the production, recall the cars, no matter what, customer satisfaction first. The next midterm plan is about sustainability of Renault. Sustainability of Renault means, at the beginning, it is top level of quality and reliability of the cars. So there is a real mindset transformation in term of quality. This has a cost. It is an investment. It start with additional costs that we are seeing here. Obviously, this is also combined with the launch of new product. But very likely, what you should see in 2017-2018 is this number should go down. Okay? I am giving you trends here. Okay? These numbers will not go down. R&D will not go down because we are multiplying. I want to use the full scale of the alliance to install a technological power of the alliance. We are ahead in electric cars. It is clear today. We want to be ahead in autonomous cars. We want to be ahead in connected cars, and we are going to go ahead also with services. We are one of the most credible group today in this field, and we think this field is of nature to changing the industry. We want to play our role, so you can expect this to continue. Manufacturing and logistic, this should go down for a very simple reason, is we have optimized the production in order to catch every single opportunity of sales, which mean additional shifts, freight, et cetera. We had air freights, et cetera. We had a lot of overcosts that we assume to sustain our growth. I can tell you in 2017 and 2018, I do not think we are going to have another 13% growth of our sales, so this should go down. In G&A, obviously part of this in the G&A are the cost of our success because we have the bonuses and the Profit sharing. profit sharing agreements that we have. The more we do profit, the more we add to this. Part of it is positive in a certain way, part of it will have to be monitored, and we will monitor them. What I can tell you is this is going to remain, this is going to go down, this is going to go down, and this is probably going to go down. Okay? Or if it goes up, it is because just we are exploding the level of profit, which is, in a certain way, something that nobody is going to be complaining of. Again, the performance in purchasing should continue to increase because let us not forget that we have common platforms. We are adding more to the alliance, both with Mitsubishi now, that is not computed in our midterm plan, that will be computed into the midterm plan. The fact that more of the cars of the future will be built on the same platform, which is going to allow higher level of localization and at the same time, more sharing. That's about Monozukuri. Again, we look at the number, you have the impression guys are on the beach, they are not working their costs, they are just benefiting from growth. Frankly, it's not the case, but it's fair to say that we need to give you different explanation for the different contributor to cost. We know that the performance on cost is going to be essential if we want to maintain the momentum of the company. Yes. Thank you, Mr. Ghosn. One more precision on what you just said for our friends, analysts. One thing that should improve in the coming year is the capitalization rate. You saw that it was very low. What Mr. Ghosn explained is completely true for the whole span of R&D. In terms of impact on the P&L, we should nevertheless benefit from a higher capitalization rate in the future, which was very low this year. Going back to the other question. Well, you know that we have a lot of things in that famous box, which calls price, mix, enrichment, and others. In 2016, we had a huge positive impact of the prices we were able to raise in the emerging market in order to offset the big headwind we had on the currency. Obviously, in 2017 and 2018, this will depend on the currency movement. We are currently thinking that obviously the currency movement in 2017 and 2018 should be a lot lower, but there is a lot of volatility in this market, and we don't know exactly what it's going to do. On the pricing, the intrinsic pricing, I'm glad to tell you that we have increased our pricing. When we follow our TTVA performance on a monthly basis, I can tell you that we have increased our position in terms of pricing in every market. The mix was positive, but you also know that we have an impact of Kwid, but that should ease in the future because Kwid was launched end of 2015 and this year, 2016. That had a very negative impact, obviously, because as you can guess, Kwid is sold at lower prices, and hence, the margin we can make on this product is obviously lower than the one that you can make on big premium cars. On the content, that is a very interesting question. You know that at the beginning of the plan when we presented our strategy, we had the intent to have enrichment in our car in order to reposition our brand and to be more present in the upper segments. This is what we are doing. We have enriched our plan, and we are passing through most of the price to our customers. It's more difficult on everything which is regulatory. You're right that most of the regulatory first phase, I would say, with Euro 6b, is almost over, even though we also had some impact from the LCV business, and that should end in the future. But at the end of the day, what we're looking at when we're enriching these products is really, again, to position the brand at a better level and to have the right balance in term of what we put in the car, what we can price to the customer, and the volume it does bring us at the end of the day in our books. Yeah. If I may also add something about pricing, which is a very sensitive issue because I know that there are some rumors on the market, Renault is growing because it's discounting. Yeah. Well, first, growth and profit are our objective. It's neither one or the other. I don't want to be the champion of the highest margin with zero growth. I want to make sure that the total profit of the company are competitive. That's what we are looking for. We control that our pricing per market, France, Germany, et cetera, compared to a basket of representative car maker, are moving in the right direction. And we have this control, and we are ready to share it with you. For those who are particularly preoccupied or sensitive to the rumors that we are the barbarians discounting cars and et cetera. So frankly, this is all absolutely not founded. We have all the elements to say it because, for you, it's important to understand that this is about sustainability. I'm not after a peak performance in 2016 and the hell with 2017. I'm not after peak performance in 2017 and the hell with it. So we know that if we want to build sustainability, we're going to have to be very disciplined, but very reasonable also in term of pricing. And that's what we're pursuing. We follow it on a regular base compared to a basket of car makers that are representative compared to our product effort. And what we want is to have the best balance between the growth, significant growth of the company, and the pricing, which is fair to our product, and that would allow us to sustain both the growth and the profitability. I would encourage all those who are a little bit skeptical about it, to really share. We are ready to share with you all the datas about the efforts that we are doing in order to maintain pricing at a reasonable level. Yes. Thank you, Mr. Ghosn. We are going to get back in the room. Georges? Yes. Good morning. Georges Dieng, Natixis. Two questions, if I may. First question on diesel. Could you share your views on what could be the penetration of diesel in Europe and in your own sales? In terms of mix, what could be the possible implications in terms of margins? Second question on EVs in general. Is this business profitable as we speak? What is the break-even point? What would be, let us say, the combined investment for both the alliance and Renault standalone for the next EV generation? Okay. Thank you. Well, first about diesel. Well, diesel is going to go down. It go down in our sales. It is going to go down with all car manufacturers. It is going down country by country. Frankly, it is very logical. With the diesel bashing that is taking place practically everywhere, with the half truths said about the diesel, well, it can only go down. Plus, the unfortunate event that happened with one of our competitors is not going to help a lot, because now there is a suspicion about all car makers doing something fishy about diesel, which you know very well is not the case. Because so far, only one car maker has been clearly designated as having a cheating device. All the others are under investigation, maybe illusion that maybe something, but frankly, nothing has been determined. I can tell you, we have been investigated in France, in Germany, in Britain, in Korea, et cetera. Nobody has so far, which we knew from the beginning, because we stated from the beginning, there is no cheating device. What's going to happen is with the fact that they want to regulate emission in any conditions, diesel is going to become more expensive, on top of the fact that the image of diesel is being bashed all the time. So you're going to have a negative marketing campaign going on, including political campaign. Plus, objectively, diesel cost is going to go up because you're going to have to put a lot of devices to reduce the emission in a kind of utilization that, frankly, consumers don't even care about. Diesel is going to go down. In our sales, it's going to go down at the level of the industry. Now, the question is how far it's going to go down? We think it's going to disappear from small cars. It may remain a little bit on the higher level. Okay? So which means premium, et cetera, some SUVs. That's what we think, but we can be wrong also. I'm afraid I may be too optimistic also, even with this. So we are preparing for this. Obviously, as you know, we have a significant offer in gasoline, particularly thanks to the Alliance, and we are the big player with electric car. So we're going to continue to invest in diesel to make sure that, I'm not saying investing to expand the diesel offer, but it's investing to make sure that our diesels are more competitive, both in emissions and in term of performance. But at the same time, we know that this percentage is going to decrease, so we are heavily investing in gasoline engine and particularly with electric cars. Electric cars, we have the clear intention to continue to be the leader, even though a lot of car makers now are coming to the electric car and recognizing the fact that this industry cannot perform without electric cars. We have an extensive experience. We are today in a positive marginal profit on electric cars. I can tell you. Because the problem of profitability is how much of the research and the development you have made, you put in your car. So I don't want to go into this debate. I consider it's a one-time fixed cost that I've already paid, okay? I don't want to reimburse for that. It's already paid. It's buried in the past of Renault. I'm analyzing, we're pushing people to sell electric cars with marginal profit. I can tell you, marginal profit on electric car today is positive for Renault, which is obviously an advantage because, we are encouraged to sell electric car, while most of the other car maker are still in negative territory. We want to advance as much as possible the volume, because this is going to be a virtual circle, where the more you sell, the more you make profit, and the more you have an advantage. You can expect our lineup of electric car to become much more sophisticated and much wider. The platform is going to be common to the Alliance. So we're going to have a common electric platform for Nissan, for Renault, and also for Mitsubishi. Okay. Yeah. You had a second question? No, that's all. Yes. Just the first step of the EVs, I think the combined investment was around EUR 4 billion for the Alliance. Yeah. This is something of the past, and we have now an exploration, as rightly mentioned. Yeah. I was wondering, this EUR 4 billion, what kind of number should we think about for the next project? Well, from now on, the investments for electric cars are not different from investments for other cars. Do not think that, for us, it is going to require much more investment to develop a new electric car compared to another car. Particularly that, as you know, for the batteries, today, we do not have to invest so much in batteries because there is so much offer in batteries, and there is competition in batteries. One of the reasons for which we started our own battery in 2008, 2009, there was no battery available for electric cars at that moment. Today, we are sourcing from LG Chem. We have many other suppliers who are doing a good job in term of batteries, and there is competition between them. This is something reassuring, which means we do not have to be involved so much into investment in battery, which was not the case at the beginning of the offensive. Thank you, Mr. Ghosn. We are going to take a question from the call now. Who is on the line? We have a question from Jose Asumendi, from J.P. Morgan. Sir, please go ahead. Thank you. A couple of questions, please. Talking maybe on the financials, will you just remind us again on the R&D spending and capitalization level for 2017, that will be very helpful. Also, we have seen the rise in raw materials for the past month. What is the best way to think about this? Can we reverse this EUR 300 million tailwind into 2017? Maybe a bit more strategically for Carlos, please. Your French competitor is basically saying that they are going to comply with Real Driving Emissions standards already three years ahead of time. Maybe if you could please talk a little bit about the implementation of RDE across the fleet, and where do you stand on Real Driving Emissions standards. On Aptiv, just a simple question. It sounds like what you are saying in terms of the product cycle, in terms of technology, in terms of the supplier integration, it looks like you are ready. If volumes go up by 5%, would you be making money in 2017 or not? If you are not making money in 2017 as volumes go up, what is the restriction or what is the impediment not to make money next year? Thank you. I do not know how many questions there is here, but can you take- Four. Four questions. Madam, you can start, and I'll take the rest. Yeah. The first one was about R&D capitalization ratio. On R&D, as Mr. Goun said, we're going to continue to invest in order to prepare the future. In terms of capitalization ratio, I cannot give you a prognostic today, but I think you can take it for modeling purposes that it's going to go back to last year level to start with, and we'll update you during the year. In terms of raw material, as Mr. Goun mentioned in his speech, we are today facing huge upward trend on the raw material that we haven't seen the impact yet on 2016, even though it has started in 2016 for many reasons. The first one being that we have semi-annual or annual contract in steel, so 2016 was protected for these increases. For the rest of the commodities, between the small hedges that we make and the time it flows through our P&L, it did not impact 2016. For 2017, we forecast a few hundred millions. Yes, I think you can take as a first assumption that it might reverse the positive impact that we have had this year, and it might even be a little more than that, but we cannot make any prognostic. Obviously, commodity is very volatile. Anything could make it go back down, and we're trying to make sure that we negotiate the best contracts with our steel suppliers. I can turn back to you, Mr. Goun, on the R&D question. Yeah. Well, obviously, as you know, there is a lot of discussion taking place about the new emissions, when they're going to be applied. Will there be enough capacity to validate all the new homologation? Because what you don't see today is all car makers are going to have to re-homologate all their cars and with the new engines. The workload for the people who are going to be the homologation is huge. We don't know how they're going to be able to deal with this. So there is a risk here, but there is a risk for the industry, no matter how advanced you are in term of technology, and no matter how much investments you've made to make your diesel extremely performant in term of emission. We are seeing this bottleneck. We are discussing with the authorities by telling them, "You have to be careful because if everybody needs to come and homologate before a certain date, you guys are going to have to face a huge workload. We don't know how you're going to do it." This is number one risk, but for the whole industry. Second, yes, some car makers are more advanced than others about real driving performance because depending about how much they invested in diesel before. Okay? It's true. Some car makers are more advanced, and some maker has it easier. But they're going to be more advanced if the segment of the market is going down. Let's not forget. We are balancing our effort into not only improving our diesel performance, but we are keeping our eyes on the fact that we need to have a strong gasoline offer, and we have to have a strong electric car offer. So we are maintaining this balance, keeping an eye on the fact that the market is shifting. For the moment, the shift is very clear. So we want to maintain our diesel engines competitive, but we are preparing for a battle, in our opinion, is going to be much more on gasoline engine, electric cars, and plug-in hybrid. Car makers are not at the same level in term of emission because the investments in technology has been very different. For some car maker, diesel was at the center of their powertrain technology. For other, it's one between different technology. Well, I'm glad we are in the second category. The last question was about AvtoVAZ profitability and the ability to be ahead of the plan in terms of breakeven. Yeah, exactly. We have announced for you operating profit in 2018. Obviously, there are a lot of things which can influence that. If the market goes up, it is positive. If the Russian government continue to support the industry, it is positive. Obviously, we are prepared to make AvtoVAZ not only profitable, but very profitable. We didn't go to AvtoVAZ for the sake, and Lada for the sake of making volumes. We think this company, well managed with a good product lineup, can be extremely profitable in Russia and can continue to be the leader in Russia and in a role which is compatible with the Renault role. I prefer not to count on anything else than, let's not count on it in 2017, 2018 zero, and hopefully on the next part, on the following part of the plan, Russia, including AvtoVAZ, should be a strong contributor to the profitability of the company. When I'm telling you our goal at the end is to have more than EUR 70 billion of revenue and at least 7% of operating margin, I don't consider that AvtoVAZ is going to be a drag on the profitability of the company. I consider that AvtoVAZ, on the contrary, should be one of the highlight, and the Russian market should be above the average of the group. Thank you. Gaetan from the room. Gaetan, Deutsche Bank. Two question. First one, I'm glad you gave us an idea on the contribution of sales to partner in the revenue growth between 2010 and 2016. Can we have the same order of magnitude that the operating result? The contribution of the partners? Well, I'm afraid I'm going to disappoint you, Gaetan. Because it's going to put us in a very awkward situation also with our partners if we start to declare how much money we make on them. What I can tell you is that sales of our partners are going to increase. That means, what you're going to see in the next six years is obviously an organic growth of Renault, but also the multiplication of the agreement with partners are going to continue. Because for the moment, we did not put Mitsubishi on the map. But we have to consider that Mitsubishi has mainly lack of products. And a lot of the products that Renault has is very compatible with the Mitsubishi offer. For example, Southeast Asia, Renault is absent. And Southeast Asia is a very stronghold of Mitsubishi. Obviously, it will be more natural for a Renault product or Renault-based product to become a Mitsubishi product in Southeast Asia, because then it allows Nissan to continue to have its normal development in Southeast Asia without having a competing under the Mitsubishi brand. So, you're going to have a lot of sales of partners are going to continue to grow. Again, we are not basing the growth of the company on this. What I want to tell you is sales of partners are profitable, and they are not bad news in terms of profit, which means we're trying to maintain the sales of partners in line with the overall profitability, obviously depending contracts, volume, et cetera. But we're trying to maintain the sales to partners on the same line of profitability of the company. Okay. From EUR 50 billion to EUR 70 billion of revenues in the coming six to seven years, what could be the impact of sales to partners in that EUR 20 billion increase? Frankly, I cannot tell you. But what I can tell you, it's going to grow. Don't expect that that's it. We're going to continue to grow because the exchanges between Nissan and Renault will continue. The exchanges of Renault and Mitsubishi, we are going to develop. On top of the fact that the existing contract, particularly in light commercial vehicles that we have with Daimler, General Motors, they are absolutely going well, and we have all the signals that they want to renew. Okay. I have a second question, which is regarding the productivity of the French plant, when you want to increase that by 40% for the next 3 years. Yeah. In the EUR 300 million provisioning you booked last year, is there anything linked to that for the next 3 years? And the second point is that what is the magnitude of cost saving you expect through 40% productivity gains in 3 years? Well, I don't know how much you put for the- On the first question, which is on the provision, we have booked almost the totality. In the EUR 300 million you had, is the end of the previous plan, and it's almost the totality of the new plan is already booked. So you won't have much more to come. Yeah. We have only one option in front of us, which is making our French plants competitive. We have no other options. That's it. We need to work on our French plants to make them competitive. And we are doing everything for that. We signed an agreement, we are investing. We are going to increase the productivity because we want all the plants to reach 90 vehicle per employee. Today, we are at 63. Almost 95. Yeah. Some plants are already above 90, which are doing very well, which means it is possible to do it, but it requires a lot of effort. It requires a lot of care. We have to pay a lot of attention. It is possible. And we have no other option. We have to make the French plants competitive, and we have to take it in our hands, and we have to sign agreements, and we have to always make a kind of trade about calming some of the concerns of the people in the plants and the union in the plant and asking for all the efforts that allow us to be competitive. That's the only way. I am not even thinking about alternative solution. I don't think they are realistic. Moving from 63 to 90 is going to be a substantial improvement in cost from the French plants. This is not going to position the French plant at the top level of the alliance. But this is going to reduce a lot, some of the handicaps that we have been facing in the past with the production from the French plants. But for us, the sustainability also for Renault, again, I come back to the sustainability of the performance, means we need to transform France into a powerhouse as much as possible and reduce the gap existing in productivity between the French plants and some of the other plants of the alliance. You need to know that today we compare all the plants of the alliance, and at the top level you have, today, China, the Nissan Chinese plant. Wuhan, by the way, is going to be very high in the classification when it will be at the. Wuhan, which is a Renault plant in China, is going to be very high into the classification. You have the Mexican plants, which are extremely performance. You have some Spanish plant, you have Slovenia, which is very good. There are ways to make the French plants competitive. We're just building it step by step, thanks to the good collaboration we have with the unions today. We're not counting on this for the but it's going to be a positive contribution to the result of the company. Is the EUR 300 million good number? Gaetan, last one, no? Okay. We're going to take the last question from the call. Who is online? We have a question from Fraser Hill from Bank of America. Sir, please go ahead. Hi, good morning. Yes, a question for Carlos on the Alliance structure. I take it you haven't spelled out any new plans today with regards to the structure, but in the past, I think you'd always argued that you needed to fix the margin at Renault and improve the profitability there. I know there's more to go, but above 6% now, if that's not a trigger to look at the capital structure of the Alliance, what might be when you look forward over the course of this plan through to 2022? Are there certain sort of dynamics or levels of profitability, perhaps, that might trigger a debate around the capital structure within the group? Could you talk about the strategic purpose of moving more deeply in a financial integration now that the operational integration is fairly complete? Thank you. Well, let me be very clear here. I mean, we obviously going to continue to converge between Renault, Nissan, and now Mitsubishi, share platforms, purchasing, et cetera. Operationally, we're going to continue the convergence and keeping the identity of the brand separate. This will continue. Now, on a capital structure, following the soap opera of the double voting rights and the discussion with the French state, et cetera, Nissan has said very clearly during this discussion that we will not accept any move on capital structure as long as the French state remains shareholder of Renault. That's it. So don't expect any move on the capital structure as long as the French state remains shareholder of Renault, because the Japanese will never accept to be part of an entity where, particularly taking consideration everything which happened, that the French state will be shareholder of Japanese assets. The day the French state decide to get out, everything is open. I can tell you, it won't take too much time. But as long as they are in, they're going to continue to be shareholder of Renault, and the Alliance will continue to move as it is. But it is very clear that the Japanese don't want any shareholder who thinks differently from the other shareholders. Okay. Thank you, Mr. Ghosn. I think we are at the end of this session. Thank you very much for your presence, for your questions. As you know, the IR team of the group is available today if you have further questions. Have a nice day. Thank you. Goodbye.