Renault SA (RNO) Earnings Call Transcript

[Audio Gap] and in replay versions 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 this document and in particular, about forward-looking statements. I invite all participants to read this. Today's call is scheduled to last about 1 hour and 15 minutes. Our CEO, Luca de Meo, will share with you his main takeaways from the first half of the year and his assessment of the group situation after 2 months as the Head of the company. Then, Clotilde Delbos, our Deputy CEO and CFO, will take you through the presentation of H1 results. To conclude, we will have a Q&A session with Luca and Clotilde that will be joined by Denis Le Vot, EVP, CEO Dacia and Lada brands; Fabrice Cambolive SVP, Renault Brands and Operations; and Thierry Piéton, SVP, Deputy CFO, Group Controller. This time, the Q&A session will be conducted through Teams. [Operator Instructions]. Without further ado, I will hand over to Luca.

So good morning, everybody. Welcome. Very pleased to be here today with you. In a moment, Clotilde, as Thierry anticipated, will share the details of our financial results. But I'll take the opportunity to say a few words to comment on our H1 performance and also maybe a quick review of my first year in the position that has been a pretty intense, marked by many changes and -- but also some progress. I think we can share with you better news than in the recent past. So the first message is that the Renaulution plan is working, and you will see it on the result and is actually already starting to pay off. So some of the highlights in terms of numbers, The group revenues are up 25% -- 27% compared to the first half of 2020 and reached EUR 23.4 billion. Very important is that the auto business operating margin is back in the black. So we're making money on our core business again. Very good performance of RCI and AVTOVAZ that have continued to improve compared to the last semesters. And I know that this is a key issue for you. The free cash flow from automotive is almost at breakeven and even positive before restructuring expenses. That means that our operation paid for our investments and our intention is, of course, to keep it that way from now on, we see the possibility. So liquidity situation continues to be very solid. And liquidity now represent more than 30% of 2021 estimated turnover, so way beyond the minimum threshold that is expected. So let me explain how we did it. First of all, the pricing strategy, so the all go-to-market strategy and probably Fabrice and Denis will be able to comment and add information on what I'm saying. But in a nutshell, we improved our net pricing position by 8.7 points on H1 2020. And this, I think, is a pretty remarkable thing. And in Q2, in fact, we have achieved plus 11.5 points. So I haven't seen many of these swings in my carrier in the last decades. So we gave ourselves the target internally. We probably also communicated about that, that we would try to position the Renault brand at the level of the best competition, namely Peugeot. And if you check in the public information, you will see that we were already able to achieve a similar price position, which was one of our objective. We have cut also our cash fixed cost, I think, faster and deeper than initially planned. And we are on track to hit our target, which was set for end of 2022, basically 1 year earlier, okay? So we think that we're going to achieve the EUR 2 billion fixed cost reduction by the end of 2021. In the semester, we reached more than EUR 600 million. So if you sum up to the EUR 1.2 billion that we cut last year, it makes a little bit more than EUR 1.8 billion reduction versus 2019. Just to give you some example of how radical was the work on fixed cost. I will mention the optimization we did on the engineering side. We have been cutting parts diversity, so industrial diversity on life cycle products by 25%. And we are planning to cut 35% the diversity on the, what we call the, Renaulution cars that will come from now to 2025. We have also reduced our breakeven point faster than announced. If you probably remember, we promised a minus 30% in reduction of breakeven point by 2023. We already achieved 25%. So that gives us a motivation to go further in the next year and months. So we promised minus 30%, 2023. We already did 25% until now. Of course, everybody knows that all these results were achieved in a pretty challenging environment, still penalized by pandemic, chip shortage and other issues because following the -- let's say, the COVID crisis, demand in our perimeter, that means main market -- where the main market is Europe is still more than 20% below 2019, and we estimate that we have lost at least 200,000 units in terms of production in H1 because of the chip shortage. But from my perspective, what is more important is that I can see after 12 months here that we -- as a team, we have really changed the mindset and approach. So I can really feel that the new paradigm, value over volume is now shared across the organization down to the plants around the world to the markets. We have, for example, reduced fundamentally our commercial diversity to boost our sales mix. In fact, in many of the volume products, we have reduced our commercial diversity by 40%. And that has also allowed us to improve the mix. I will give you some example. The new product that we have launched, the Arkana in Europe or the KIGER in India, they are reaching 85% of high-end version, which is pretty unprecedented in Renault, but also cars that were already in the market and are best seller, like, for example, the Kaptur shows 71% mix of high-end version. So it means that we have reduced diversity to actually boost the value that we're proposing to the customers and the customers are buying. We also improved the channel mix in H1 for the Renault brand. The rate of our retail sales have increased by 2 points compared to H1 2019. And just as an example, Sandero is again the best-selling passenger car in Europe. When you look at, let's say, the retail channel and I think this is kind of an indication of the approach that we are having. We also keep our leading position in Europe in what we call green sales. So we are on a double-digit mix with pure EV cars with ZOE, with Twingo EV and with Dacia Spring. And in fact, as you probably remember, the E-TECH hybrid technology, hybrid and plug-in hybrid was launched in September, October of last year. But in fact, what happens is that we were able to replace basically diesel with hybrids. That's in a nutshell what happened. So already 1 out of 4 of our products, it's hybrid. So you have cars like the Arkana where the mix is already 40%. And that will allow us, we think, to, let's say, achieve the CAFÉ targets this year. So, so far, we are in line with our plan. And so we confirm that we are pretty confident that by the end of the year, we will hit our objective. So I also think that the speed of execution is nothing to compare with what it was a few years ago. At least, this is what the people that have been here for some times are telling me. Just as an example, we used to have one executive committee per month. We do it every week. I meet design teams and engineering team every week in the Technocentre. And the result of that is that we were able to greenlight 9 products in 9 months, which is something we would have done in a few years. So we have been very, very quick in processing on the product planning. So all the projects that we had announced on the 14th of January are on track in terms of timing, in terms of cost, in terms of, let's say, content. So -- and I also believe that -- I knew that but -- the last 6 months have been a confirmation that the new brand organization gives us more focus, more orientation to resolve, more orientation to the market and to the customers. So I think the organization is more reactive and agile than ever. So this is the Renaulution effect. That said, we think we still have a lot to do to close the gap with our best competitors. We are absolutely aware of that. We are working on it. And I think that you will see, starting from next year that the new wave of products, especially the reconquest of the C segment will help us to step up from the current performance. We have plan to present the MEGANE electric in Munich. I believe that this is a leading product that shows all the competence of Renault when it comes to electric vehicles. I'm very confident this will be considered one of the benchmark in an important segment where we said we wanted to, let's say, go to increase, let's say, the average transaction price of Renault, which was one of the strategic challenges that we have. I think that the first step has been reached with this first half results, with an operating margin that is basically close to what we had promised for the end of 2023. So we are something like 2.5 years in advance to our commitments. So I also think that the worst is behind us, but you will see we remain prudent, and I think we must still fight on many aspects, including cost. We know that the recovery will take some time. It's a typical issue in the automotive industry. We now have to maintain this performance in H2 despite some of the headwinds that we'll have to fight. Like, as everybody know, lasting chip shortage and raw material inflation, I'm sure that Clotilde will come back to that. But besides the risk, we have also some opportunity as the demand might -- we think might recover, provided the, of course, that the pandemic is under control. As soon as we will have better volume, we will clearly be able to leverage the work done on our breakeven point. That will be a very important swing effect. And of course, we will continue to work to improve our business mix by keeping our discipline. So everything that we have achieved so far in terms of price, in terms of mix, in terms of commercial policy, we have absolutely no intention to go back. So before leaving the floor to Clotilde, let me also share with you our guidance for the year. We expect the European market and the Eurasian market to be up 10%, and Latin America demand up 15% for the full year. And in this context and considering the risk on the production of about 200,000 units at the end of the year, as a cumulative, we target for an operating margin for the full year in -- I would say, more or less in line with the first half, which, as I said before, was the commitment we gave for the end of 2023. So I will now hand over to Clotilde. Thank you for your attention.

Yes. Thank you, Luca, and good morning, everyone. As Luca told you, the group's financial results for the first half of 2021 show a marked improvement over last year. It is true that we have been in a very different environment compared to the first half of 2020, which was very specific because of the lockdowns in Europe. But this does not mean the environment has been very supportive as demand has continued to be disturbed by restriction related to the pandemic around the world, and the production has been disrupted by the chip shortage. In light of this, as our CEO just told you, these results underline the significant progress we have achieved to restore our financials and show the effectiveness of the Renaulution strategy. While we recall we still have a lot to do, these results mark a milestone in our turnaround. Luca has just shared the guidance for the full year. This guidance must be read in the context of rising prices of raw materials and uncertainties regarding demand and chips availability. About the chip shortage, we told you at the beginning of the year that we were seeing a risk for production loss of about 100,000 units in the full year after higher losses in H1, but thanks to some recovery in H2, especially during the usual summer break. Unfortunately, the recovery looks now quite unlikely as on top of the initial lack of production capacity, we are now impacted by the COVID development in Southeast Asia, where some production are located. While its visibility remains weak, our best estimation now is a loss of production of about 200,000 units for the year. Now let's look in detail at these numbers and share the main explanations. Let me start with a brief summary of our commercial figures as released on July 16. In the first half, Renault Group sold 1.420 million units in -- i.e., an increase of 18.7%. In Europe, volumes were up 14.3% in a market much more dynamic. But as you know, in the frame of our strategic plan Renaulution, we have changed our commercial parading and favored the quality of our business. This led us to give up some market share. When you add the impact of the chip shortage, you have the explanation for this performance. I also would like to stress that the market recovery in H1 has been weaker than expected at the beginning of the year, and volume remained more than 20% below 2019 level as Luca already told you. Outside of Europe, the situation has been a bit the same, but we enjoyed a stronger growth than in Europe, except in Asia Pacific, where we have suffered in South Korea from a strong aggressivity from domestic players. Actually, in the market where we are playing, demand has been down 13% versus 2019. By brand, Renault was in line with the group performance, while Dacia and Lada did better and ASM worse. It is worth noting the strong performance of the LCV business that reports an increase of 44% year-over-year. On Slide 13, we show the full P&L for the group. Starting with the top line, group revenue reached EUR 23.4 billion, an increase of 26.8%, but on a very depressed comparison. As in H1 2020, our revenues were down 34%. The next line shows positive group's operating margin at 2.8%. The net profit is back in the black at EUR 368 million after the losses booked last year. This improvement came partly from our own performance, but also from Nissan's return to net profit after the abyssal losses reported in 2020. On the next slide, we show the revenue contribution by activity. Group revenue after flat Q1 grew 61% in Q2 from an exceptionally depressed level in 2020. Automotive, excluding AVTOVAZ, contributed for EUR 20.3 billion in H1, meaning an increase of almost 29%. While impressive, this increase was not yet enough to get back to 2019 revenues level. AVTOVAZ achieved a 36% revenue increase and contributed for EUR 1.5 billion. This performance has been supported by a buoyant Russian market, a good level of pricing and this despite an adverse currency trend. Revenues from our captive sales financing RCI Bank were down 5% at EUR 1.5 billion, reflecting lower dealer activities in the context of curfew and strict inventory management. I will now review the breakdown of revenues for the automotive activity, excluding AVTOVAZ, on the Slide 15. Please note that we have changed slightly our presentation to split the external items from the internal one. The first item, currency, has been negative by 3.9 points. The usual culprits explained this impact, Argentinian peso, Brazilian real, Turkish lira and Russian ruble. The second bucket is the market impact on our volume development. As the comparison basis was easy, we have a strong positive of EUR 3.7 billion. The next one, the group's performance in terms of volume development, has had a negative impact of EUR 1.4 billion. This is the consequence of our strict commercial discipline, which has led us to give up some poor businesses and the chip shortage, which has prevented us to fully leverage the success of some of our models. The regional mix has been a negative of 2.2 points. This illustrates the strong growth we enjoyed in countries with prices below group's average, like India and Russia, but also the lower sales in South Korea where the average price of our cars is higher than the group average. The product mix is a positive 2.9 points. Coming from the good start of our new C Crossover Arkana, the continuing stream demand for LCVs and lower sales of some model was lower than group's average price. Price in fact is the brightest spot, with a contribution positive by 8.5 points for the first half and 11.5 points for the sole Q2. As Luca mentioned, this is the fruit of the new commercial policy of Renaulution. It shows how serious we are about restoring the pricing of our cars, the quality of our business and protecting our residual values. Sales to partners contributed positively for 2 points in H1. This is above all due to a weak comparison basis. The last bucket, others, contributed positively for 6.8 points. This unusual high impact is coming from different contributors. Due to the partial lockdown of our network in H1 2020, the spare parts and use car businesses base of comparison were at a very low level. In addition, we had a destocking impact from our wholly owned dealers and the impact of the buyback retreatment. I will now turn from the automotive revenues to group operating margin by operating sectors. The automotive segment, excluding AVTOVAZ, was almost breakeven at minus EUR 41 million versus a loss of EUR 1.6 billion in H1 2020. AVTOVAZ operating margin has been positive at EUR 118 million to compare with a loss of EUR 2 million last year. Globally, the auto activity posted a positive operating margin of EUR 77 million, showing an improvement of EUR 1.7 billion over the prior year. Mobility services reporting an operating loss of $16 million. Our financing activity, RCI, delivered EUR 593 million contribution to the group margin versus EUR 469 million last year, and I will comment more in detail this performance later in the presentation. On the next Slide #17, we provide you explanation on the group operating margin variance. H1 group operating margin is positive at EUR 654 million. This is a EUR 1.9 billion improvement versus last year. As for the revenues, we have changed the way of presenting, and we are now -- not using the monozukuri anymore as we have regrouped the cost under our control, including G&A in the productivity bucket. In more detail, first, with the external factors. Currency weighted for EUR 70 million, reflecting the negative impact of the Russian ruble and the Argentinian peso, but also the positive from the Brazilian real and the Turkish lira, thanks to our export production base in these 2 countries. Raw material impacted negatively for only EUR 76 million this half, but we already know that it will be much more negative in H2 as there is always a time lag effect between the spot price and the impact on our P&L. Then comes the volume impact from the market, which is a positive EUR 642 million, reflecting the volume recovery on last year's depressed level. We have isolated the volume impact, not related to the market development, but to our performance -- but to our own performance and sales to partners. It is a negative EUR 155 million. This does not come as a surprise and came from our commercial policy that has led to some market share renouncement. The mix price enrichment impact is positive by EUR 599 million and shows the benefit of this new policy and pricing discipline in Europe and overseas. Productivity gain contributes for EUR 219 million, and I will give you more detail about them in just a minute. As already seen, AVTOVAZ and RCI have increased their contribution by EUR 120 million and EUR 124 million, respectively. To finish this part, let's give a look at the last bucket named others. It contributes positively for EUR 454 million, and as usual, is made of many different things. The major contributors are parts and dealers activity that has been almost idle in H1 '20, and the impact of the retreatment of sales with buyback commitment. In the bucket name productivity, we show a gain of EUR 143 million coming from the purchasing performance and material optimization. Warranty costs have increased by EUR 58 million, notably because of the low activity during the lockdown and as we have decided to support our dealers for being more flexible regarding some warranty deadlines. R&D showed a gain of EUR 87 million in the P&L, while the expenditure has been reduced by more than EUR 200 million. The gap is explained by the parts capitalized, although the capitalization ratio decreased from 48.6 points in H1 2020 to 42.7 points this half. Manufacturing and logistics contributed for EUR 47 million in spite of the chips disruption, and the change in amortization and capitalization ratio weighted for EUR 63 million or 0.3 points of revenues. Finally, G&A gave -- have cut by EUR 63 million, reflecting our strict cost commitment. Regarding RCI. RCI generated EUR 8.7 billion of new financing in the first half versus EUR 7.7 billion in H1 '20. Average performing assets decreased by EUR 2.6 billion, reflecting the lagging effect of the collapse of the business in H1 '20. Moreover, while the financing to retail customer was progressing lightly in H1 2021, financing to dealers decreased materially, notably reflecting the new inventory policy. The net banking income receded slightly as a consequence of change in the regional mix. The cost of risk decreased from 0.99% to 0.16%. And these sharp improvements stem from much better business conditions, lower wholesale volume and some nonrecurring provision reversal. Therefore, one should not expect the cost of risk to stay at this low level for the full year. Operating expenses, while under strict control, increased 6 basis points because of lower average performing assets. And as a result of the above, RCI operating profit contribution increased EUR 124 million and reached EUR 593 million for the first half back to 2019 level. Now that we have covered the operating variance, I will continue down the P&L with the other operating income and expenses items. They amount to minus EUR 83 million versus minus EUR 804 million a year ago. Several items explains this improvement. Restructuring costs and provision decreased by -- from EUR 166 million to EUR 145 million. Impairment returned to a more usual level, impacting for minus EUR 43 million after the exceptional minus EUR 445 million booked last year. Disposal of some real estate assets led to a capital gain of EUR 128 million when we had a loss of EUR 153 million last year. Continuing down the P&L, the next item is the net financial income and expenses. These results improved from minus EUR 214 million to minus EUR 163 million. It came partly from a positive catch-up effect on the debt value following the decision to reimburse in H2, EUR 1 billion of the loan benefiting from the French state guarantee. The next slide shows the impact of associated companies in Renault's P&L. Nissan's contribution to our first half is positive, EUR 100 million when it was a negative EUR 4.8 billion for the first half last year. Contribution from other associates has turned positive to EUR 6 million compared to minus EUR 70 million last year due notably to the negative results of our Chinese JVs in H1 '20. I will now turn back to the P&L, where the next tax charge for the first half came to EUR 200 million versus EUR 273 million last year. While our taxable base increased, I remind you that last year amount included a charge of EUR 268 million coming from AVTOVAZ deferred tax asset reassessment. Bottom line, net profit after tax came in at EUR 368 million versus a loss of nearly EUR 7.4 billion last year. Now that I have completed the analysis of the P&L, I will turn to Slide 24 on the evolution of the net debt. Cash flow from operation, excluding AVTOVAZ and restructuring expenses, amounted to EUR 1.804 billion versus EUR 2 million -- EUR 22 million a year ago, reflecting the operating performance improvement. Net tangible and intangible investment came to EUR 1.5 billion in the first half, down EUR 1 billion versus last year level. CapEx at EUR 0.8 billion were down nearly EUR 0.6 billion. Capitalized R&D decreased by EUR 481 million from EUR 658 million following our strict investment policies, while financing the development of all the cars embedded in the Renaulution plan. Each vehicle represents an investment of EUR 198 million versus EUR 464 million a year ago. And it is worth noting that our investments are covered by our cash flow from operation. Change in the working capital requirement had a negative impact of EUR 0.4 billion due to the low level of payable considering the EC crisis and despite a strict management of our inventories. AVTOVAZ contributed positively, EUR 294 million, to the free cash flow and restructuring costs led to a cash out of EUR 302 million, in line with the 2022 targets. In total, the group operational free cash flow was negative by EUR 70 million. I remind you that it was a negative of EUR 716 million in H1 2019. After taking into account the proceeds of the Daimler's share disposal and some ForEx and IFRS impact, our net automotive financial position has improved by EUR 0.8 billion and stood at minus EUR 2.7 billion. And the group liquidity situation was EUR 16.7 billion at the end of June. On the last slide, we show the inventory situation in your balance sheet and for the independent dealer network. As you can see on the slide, inventories decreased significantly, partly because of the chip shortage. At the end of the period, we have shipped cars to our independent dealers as the level was not adequate for covering needs during the summer break. And now the total inventory represents about 62 days of business. This completes my review for the first half of 2021, and I turn back to Luca.

Okay. Very good. Thanks, Clotilde. So I know that besides the analysts, there are many employees that have connected today. So I'd like to take this opportunity to thank our teams for the remarkable work. Job was done. And of course, we encourage them to do even better in the months to come because at least we've shown that this is possible to turn around this company as we wanted and as we planned. I am pretty confident for the future. I think that Renault Group is moving into action. And alongside all the employees, the management team is united in its effort and entirely dedicated to the turnaround. So now with Clotilde, with Denis, Fabrice and Thierry, we, of course, will be very happy to answer to all your questions.

Thank you, Luca. So we will start the Q&A session. [Operator Instructions] So we're going to take the first question from Thomas Besson.

I hope you can hear me. I have 3 questions, please, relatively simple, all of them. The first one is on CapEx. You spent substantially less than the, I think, we had old model. Can you give us an indication of either the absolute or the percentage amount of CapEx we should expect for the year? Should we, like for the margin, double the EUR 1.5 billion you spend? That's the first question. The second, pricing was very impressive in Q2. We are getting to, I think, the anniversary of the first initiatives that the new management team took. Is it possible to anticipate a pricing that remains above 5% in the second half? Or should we, the opposite, believe that it's going to be more in the low single digits given that you already had, I think, 6% in H2 last year? And third question, on RCI Bank. Is there today any visibility on the possibility for RCI Bank to pay a dividend to the automotive business? And could that dividend be around the EUR 1 billion amount that we had been talking about in the past, when we saw the potential results could be distributed by RCI?

So on CapEx, our current internal view is around EUR 1.7 billion for the year. Clearly, we are targeting to be less than EUR 4 billion for R&D and CapEx for the year. And again, I reiterate because we achieved that through reduction of diversity, more discipline in what we develop, but we do not touch -- and actually, we're progressing very well on all the Renaulution plan in terms of cars. And so it's really discipline. We are able now to do cars with less -- a single car with a lot less R&D and CapEx, what we call, entry ticket within the company. So we're not ending the lineup. It's more discipline, and that's a great work which is being done by Gilles Le Borgne. Luca, do you want to add something?

Yes, I just wanted to give you a figure. I think compared to the previous generation of cars, we were able, thanks to the work of Gilles and the engineering team, to reduce by 40%, the average entry ticket, okay? So this is pretty massive. It's almost half of what we used to do before to do cars, and in my opinion are even better. On the pricing thing, Thomas...

Sorry, Luca.

Yes.

Sorry, I think there may have been a technical issue. Maybe it was on my side again, but I didn't hear the beginning of Clotilde's answer. So did you answer, Clotilde, the question about CapEx in absolute terms or percentage terms or...

Yes, but it is different, Thomas. It's for everybody, but I'm just kidding. Yes, I said -- you hear me?

Yes, I hear you.

No, I said it's -- we're targeting something for CapEx around EUR 1.7 billion for the full year.

For H2?

Yes -- no -- yes, for the full. CapEx and R&D -- and R&D and CapEx for the full year something lower than EUR 4 billion.

And Thomas, did you hear my answer?

Yes, I did.

So I'm going to make a second comment on the pricing thing. I think that, of course, we have seen a pretty impressive dynamic on the pricing, we have no intention to go back. That's for sure. I think probably -- we will probably experience a kind of inflationary context. So we'll be following what competition does. The other thing that you have to take into account that there is still room for us to improve the net pricing position, basically, I would say, for 2 reasons. One is the product that we have been launching, for example, the Arkanas, the KANGOOs, the E-TECH technology, et cetera. These are all, let's say, products that will probably push our mix up. We have changed, I would say, completely the go-to-market and the remuneration policies of our dealer network, turning them from volume to turnover and to margins. And of course, you need some time for this thing to kick in. So I am pretty positive that we will be -- that this thing is structural. It's a base also for the future, and we will continue like this. Yes, maybe not exactly on the same dynamic because that thing has been -- but I -- this is not a one-off. This is a base for the future. It's what we wanted to do.

And on RCI, obviously, the good news has been last week when the Central Bank -- European Central Bank announced that they will lift the ban. So we now need to go back to them because they are changing some of the requirement in terms of a capital ratio requirement. But we're still targeting to try to get what we had announced. But I can confirm today, I hope we're going to be able to confirm before the Q3 announcement.

We're going to take the next question from George Galliers from Goldman Sachs.

The first question I had was, Luca, you've been at Renault for more than 12 months now. And if we look at Renault, there is clearly a very valuable asset in the Nissan holding, which if realized in part could provide you with the cash to not only have a best-in-class balance sheet, but also to enact your vision for Renault faster. Can I ask, have you, as CEO, inquired as to whether there might be an opportunity to reduce the Nissan stake when Nissan share price is at an appropriate level? Is it something you would be interested in? And what would actually be the process in terms of requisite approvals to take action here? Then the second question I had was with respect to the dealer activity and also the after sales. Would you describe the 1H level as normal? Was there actually some catch-up in the aftersales as restrictions lifted? Or were dealer profits actually higher than normal due to the tightness in the supply chain? Or do you think there is actually sequentially further opportunities for that side of the business in the second half and also as we go into 2022?

So I think on the Nissan, I think, you're going a bit too far. I think the issue for us right now is -- and that -- this is what we said also a few months ago, was to turn the work with the alliance partner into some key operational issues. I think we're doing a very good job together. We've made some decisions that show that the alliance is working as a benefit from an operational point of view. Think about the deal we had with Mitsubishi for Europe or the decision we made on battery, also battery supply and on battery commonization. So that's the kind of work we're doing. I'm very happy with that, although it also gives me the chance of your question to congratulate our colleagues from Nissan and Mitsubishi for the good job they have done. So we are in a completely different environment, I think, and relation that we used to have, I would say, a few months ago. On the after sale, I would consider maybe Denis or Fabrice can comment, but I would consider the activity of to say, relatively normal. So there's not been any anticipation of strange things. So we will continue in this direction.

Yes. For the aftersales actually, just remember, last year, there was a pandemic and the COVID, and the people didn't drive the car and the workshop were closed for a month during the first half. So here, we are more back to normal. So there is no exceptional factor in this one.

So I will turn now to José Asumendi.

It's José, JPMorgan. Congrats, Luca and Clotilde, on the progress done so far. We're starting to see the results. A couple of questions, please. Luca, can you take us through products that you have discontinued, products that you're launching, step 2? And then three, the opportunity you see in product mix? I don't know how you define it, but maybe a share of crossovers and SUVs in your business that you can think you can increase in the next 12 months. So I'll be very interested in hearing about that. And then second, Clotilde, can you talk a little bit about restructuring cash outflows and provisioning, maybe first half '21? And then how much are you expecting for the full year? How much have you provisioned so far? What kind of restructuring cash outflow should we expect for the second half of the year?

Look, I'll try to make it simple because, of course, there are a lot of products. But one of the thing you have to keep in mind is that we are achieving these results on a low cycle -- on a low product cycle, okay? So where most of our mix is done by basically small cars, okay? So we are entering with 2022. We kind of started with the Arkana, et cetera, but we're entering 2022 the phase, 2022, 2023, 2024, the phase where we will be putting like a lot of products on the C segment, which was a segment where historically Renault was performing. And in the last cycle, we were not there where we should have been, okay? So you would see the MEGANE coming in the first semester of 2022. Basically, the car will be kind of replacing the ZOE on a completely different cost structure because that's a new generation of product with different batteries and more competitive. And of course, with a higher, let's say, potential in terms of pricing because it's a C-segment car, okay? And then later, you will see -- in the second semester, you will see the successor of the Kadjar, which was a product that was not successful, was not competitive, where we had issues of pricing, of residual value and simply competitiveness, okay? So we're entering a different cycle. What we have discontinued is, if I would say, within the range. That means we've cleaned up all, and Fabrice can comment on that, but we've cleaned up a version that we're not working. We have discontinued products on versions or engines in markets where we are not making the right margin. So we did kind of a dirty work and very detailed work around the globe to make sure that the profitability was protected. And of course, when we saw products, think about some C, D product that were not successful, we didn't necessarily, let's say, push these cars just for the sake of doing the volumes. So that's what we have done. We haven't stopped fundamentally anything. But the good news is that we are entering now in a different phase from a product life cycle.

I will turn over to Thierry, our Deputy CFO, on the restructuring question.

Sure. Thanks, Clotilde. So from an income statement perspective, the second half should be roughly in line with what you saw in the first half, the EUR 144 million. From a cash standpoint, first of all, we're completely in line with the plan that was set out in 2022 cost reduction program. So if you remember last year, we had cashed out about EUR 330 million in total, which was in line with the objective we have of about 30% in the first year. This first semester, the EUR 302 million gets us to about 50%, so still in line with what we had set ourselves as a pace. I think what you should see in H2 is slightly higher than the first half.

So next question from Charles Coldicott from Redburn.

Firstly, I wanted to ask about market share loss in Europe, which I think was about 1.5 percentage points so far this year. Obviously, an element of that is the inevitable consequence of the fact that you've raised prices and switched channel mix. But I guess, an element is also related to the chip shortage. So do you expect to recover some or all of that market share in Europe later this year or next year? And then my second question, I just wanted to ask about electric vehicles and get an update there, maybe on the order book for the Dacia Spring? And also on the ZOE, I think you've done 33,000 units this year. Are you still confident of reaching 100,000 by the end of the year? And given the comment just now, when the MEGANE comes out, are you going to stop selling the ZOE or you'll continue to run that for a few more years?

Okay. Fabrice, for the market share?