Groupe Renault - 2019 Universal Registration Document

RENAULT: A RESPONSIBLE COMPANY

ANNUAL GENERAL MEETING OF RENAULT ON APRIL 24, 2020

GROUPE RENAULT

CORPORATE GOVERNANCE

FINANCIAL STATEMENTS

RENAULT AND ITS SHAREHOLDERS

ADDITIONAL INFORMATION

RISK FACTORS

RENAULT – ANNUAL NET AUTOMOTIVE OPERATING CASH FLOWS (EXCLUDING AVTOVAZ) IN FOREIGN CURRENCIES AS OF DECEMBER 31, 2019 AND IMPACTS ON THE OPERATING MARGIN The main exposure in 2019 concerned the pound sterling, amounting to a sensitivity of around -€14 million for a 1% rise in the euro. The 10 main exposures in absolute value and their sensitivities are presented below, in millions of euros:

01

Currency

Net annual operating flows

Impact of 1% appreciation in the euro

Pound sterling Russian ruble

GBP RUB PLN DZD USD ARS KRW

1,427

(14)

937 890 601 522 440

(9) (9) (6) (5) (4)

Polish złoty

Algerian dinar

US dollar

Argentinian peso South Korean won

(632) (638) (781) (998)

6 6 8

Japanese yen Romanian leu

JPY

RON TRY

Turkish lira

10

Working capital requirements: any hedges of this foreign exchange risk require formal authorization from the Finance department or Senior Management, and the results are then reported to Senior Management. Financial income: the key principle of the Group’s management policy is to minimize the impact of currency risk on net financial income. In particular, the financial needs of the subsidiaries are usually met by Renault SA in local currencies and are hedged to avoid currency impacts or when such refinancing is not reasonably possible, via sources of external funding in local currencies. If a subsidiary needs funding in a currency other than the local currency, the Group’s central Treasury monitors the operations closely. Cash surpluses in countries that are not part of the parent-company’s centralized cash management are generally invested in local currency, under the supervision of the Group’s central Treasury department. Finally, Renault Finance can carry out foreign exchange transactions on its own behalf, within strictly defined risk limits, and positions are monitored and valued in real time. This activity is chiefly intended to maintain the Group’s expertise on the financial markets. It generates very short exposures and does not exceed several tens of millions of euros, and cannot therefore have a significant impact on Renault’s consolidated results. Share in the net income of associated companies: on the basis of its contribution to 2019 net income, a 1% rise in the euro against the Japanese yen would have decreased Nissan’s contribution by €2.4 million. This impact corresponds only to the impact of the euro on the conversion of Nissan’s contribution to the consolidated statements of Groupe Renault; it does not reflect the inherent impact of euro fluctuations on Nissan’s own accounts, given that Nissan does a more or less significant level of euro zone business that Renault has no control over.

Shareholders’ equity: equity investments in currencies other than the euro are not usually hedged. This may lead to translation adjustments, which the Group recognizes in shareholders’ equity. However, given the size of the investment in Nissan, Renault’s share in Nissan’s net worth has been partially covered by a specific foreign exchange hedge (see note 12-G to the consolidated financial statements). Net cash position: as stated above, a portion of Renault’s financial debt is denominated in yen in order to cover part of the Company’s investment in Nissan. At December 31, 2019, a 1% increase in the value of the euro against the yen would increase the Automotive division’s net cash position by €7 million. Moreover, the Automotive net cash position may be affected by currency fluctuations on subsidiaries’ financial assets and liabilities denominated in their home currency. (An analysis carried out to measure the sensitivity of financial instruments to currency risk can be found in note 25-B-2 to the consolidated financial statements). Interest rate risk The Automotive division is exposed to a limited risk of changes in interest rates, and Groupe Renault’s exposure to interest rate risk concerns mainly the Sales Financing activity. For the Automotive division, the interest rate risk management policy is based on two principles: the constitution of liquidity reserves is generally carried out at P floating rates. The Automotive division’s available cash is centralized, as far as possible, in Renault SA, and placed in the form of short-term bank deposits by Renault Finance; funding of long-term investment is generally obtained at fixed P rates. Fixed-rate loans are maintained at fixed rates as long as the rate curve is close to zero or even negative.

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GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2019