Q1 2015 Renault SA Corporate Sales Call
Apr 23, 2015 AM CEST
RNO.PA - Renault SA
Q1 2015 Renault SA Corporate Sales Call
Apr 23, 2015 / 05:00PM GMT
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Corporate Participants
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* Thierry Huon
Renault SA - Director of IR
* Jerome Stoll
Renault SA - EVP & Chief Performance Officer
* Dominique Thormann
Renault SA - EVP & CFO
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Conference Call Participants
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* Kristina Church
Barclays - Analyst
* Thomas Besson
Kepler Cheuvreux - Analyst
* Charles Winston
Redburn Partners - Analyst
* Horst Schneider
HSBC - Analyst
* Jose Asumendi
JPMorgan - Analyst
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Presentation
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Operator [1]
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(Audio in progress) -- commercial results and Renault Group revenues conference call. I now hand over to Mr. Thierry Huon. Sir, please go ahead.
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Thierry Huon, Renault SA - Director of IR [2]
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Thank you. Good evening, everyone. First of all, I would like to apologize for this late call. But, Valeo had just its call before us and wanted to give the opportunity to all of you to participate with both.
That said, welcome to Renault's first quarter 2015 conference call broadcast live and in replay versions on our Website. The presentation file and the press release 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 45 minutes. We have two speakers, as usual, Jerome Stoll, EVP and CPO, and Dominique Thormann, EVP and CFO. Their presentation will last about 20 minutes and will be followed by a Q&A session. If we don't have the time to take everyone's question in this session, Alain Meyer and myself will be around to take your calls later.
Without further ado, I will pass the call over to Dominique for a few opening remarks.
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Dominique Thormann, Renault SA - EVP & CFO [3]
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Thank you, Thierry, and good evening, everybody. Before reviewing Q1 commercial results with Jerome in a minute, I would like to highlight a few takeaways from this first quarter. Firstly, the European market was better than anticipated during the quarter under review. And this is good news.
In light of this, our full-year assumption made at the beginning of the year turned out to be too cautious. As you have probably seen in our release by now, we have upgraded our full-year forecast for the region. And Jerome will discuss this in more detail in a few moments.
Secondly, business with our partners continued to expand, which contributed significantly to our consolidated revenue growth this quarter again.
Thirdly, our business outside of Europe faced strong headwinds in the first quarter, particularly in Russia and in Latin America. But, we were able to contain this situation.
Given this overall context, we maintain our full-year 2015 guidance.
Finally, tonight's call, as Thierry said, is a quarterly sales and revenue briefing. We will not be taking questions relative to the French state's recent share purchase, which is a matter in the hands of the Board of Directors.
Having made these preliminary remarks, I will now pass over the call to Jerome, who will review our commercial performance in the first quarter. Jerome?
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Jerome Stoll, Renault SA - EVP & Chief Performance Officer [4]
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Thank you, Dominique, and good evening, everyone. Q1 was a quarter of growth for the Renault Group as our registration increased 0.8% despite severe market downturns in Russia and Brazil.
The Renault brand went up 11.8% and drove our growth in Europe. Therefore, supported by our lineup extension, we confirm our 2015 sales forecasts.
Let me enter into more details in slide 6 with the market trends for the first quarter compared to the same period last year, globally and for each region.
The global TIV was up by 1.7%, driven by Europe, China, and North America. The European market kept growing over the period with a 8.9% rise. This increase was above 5% in all major countries, including France.
With 4 million units registered, this is the best Q1 since 2011 when Europe was a highly subsidized market.
In Africa, Middle East, India, the market went up 5.4%, with India growing 4.5%. We faced a contrasted situation in Q1 in Eurasia. The troubled economic situation kept the Russian market down 36.3%. At the opposite, Turkey's rebound was 50%.
Asia-Pacific TIV was slightly up 0.6%, driven by China and Korea. Americas suffered a fall of 10.3%, directly linked to the severe downturns in Brazil and Argentina.
You can see on slide 7 that, in this context, Renault registrations grew 0.8% with balanced result between the regions. With 35,000 units above last year coming from Spain, Italy, UK, and France, once again, Europe offset the 11.3% fall in our international operations.
In Eurasia, the gain of 6,000 units in Turkey did not overcome the loss of 19,000 registration in Russia. In AMI, Africa, Middle East, India, our registrations grew slightly despite our dynamism in Maghreb. We expect better performance in Q2 and Q3, thanks to the launches of Lodgy and A-Entry in India.
In the Americas, our operation suffered 24,000 units loss, mainly in Argentina and Brazil.
In Asia-Pacific, a growth of 13.7% for Renault Samsung Motors in Korea contributed to the 17.4% sales increase over the period.
If you turn to slide 8, you can see that our international mix of sales was down 5 points to 38%. This is due to the strong European sales momentum combined with the downturns in Russia, Brazil, and Argentina.
Logical consequence is visible in top 10 ranking of our countries, representing 70% of our sales. Five countries out of the top six are Europeans. Russia stepped back from third position to the eighth place. Argentina, in the sixth place last year, went out of the ranking.
This is worth to note that, despite adverse conditions, the Brazilian market remained the second most important for Renault.
Despite these overseas headwinds, overall, we strength our position in Q1 compared to last year. We gained 0.3 points of market share in our top 10 countries to reach 10.1%.
Now, we'll detail our performance in each region. Let's begin slide 9 with Europe, where our sales grew for the seventh quarter in a row. Our market share went up by 0.1 points to reach 9.8%. This represented 35,000 units more than in Q1 2014. 31,000 units were linked to TIV and market mix, and 4,000 units were the result of our new product performance and the hedging of C and D segments renewal.
The Renault brand is the main contributor, with 11.8% increase. Renault remained the leader of the small and (inaudible) cars, A and B segments, driven by the success of the new models. Clio went up by 17%, Captur by 27%, and Twingo by 14%.
The first feedbacks from the customers regarding Espace, new Espace, are very positive. We already took 5,000 orders, which is more than half of the Espace registration in full-year 2014. The initial Paris version represent 40% of the mix.
Dacia registrations were 4.3% higher than last year with Sandero remaining the number one car to private customers in Spain.
The Group market share went slightly down in France over the quarter, but we'll improve in Q2 and Q3 with the help of our upcoming models.
The decrease of Dacia's registration in France is temporary. It is directly linked to an overload of back orders in Q1 2014 coming from late 2013. Since January, the level of Dacia orders is at par with 2014.
Sales momentum in Europe should remain positive. This positive turn is backed by our order bank, which represents almost two months of sales, largely above the three last years' level.
The slide 10 presents our year-to-date market share per sales channel for the five countries for which data is available. The Group commercial performance remained mainly based on retail segment sales. Our decrease in the fleet channel was partially due to the postponement in Q2 and Q3 of orders for two major key accounts in France.
These sales were made in respect with our pricing policy. Renault price positioning remained unchanged over the basket of competitors.
In Eurasia, slide 11, the market share was up by 1 point at 10.6% with the help of a favorable market mix. In Russia, the priority was to preserve our profitability. The plant was shut down several weeks in Q1. And after a 25% price increase in 2014, we stabilized our pricing positioning.
Nevertheless, Duster kept its position of bestselling SUV with 9,000 registration for the quarter. We expect to recover our lost market shares with the introduction of an automatic transmission, which represents 50% of the mix for Logan and Sandero in the very important (inaudible) market.
In Turkey, the market was quietly recovering in Q1. In this context, Renault Group gained 6,000 units compared to the last year. The Renault brand remained the second [PC] brand of the Turkish market.
In the AMI region, slide 12, we gained 1,500 units. In India, before the launch of Lodgy and A-Entry, Renault lost 1,000 units, relying almost only on Duster to secure its sales. Maghreb supported the sales of the region in Q1 with a 5,000 units increase. In Morocco, the Renault Group remained largely leader with a 38.3% market share and a number one position in the sales ranking for Dacia Logan. In Algeria, the opening of the plant in Oran strengthened the Group leadership as the new Renault symbol made in Algeria hit its sales record of 1,300 units in March.
In the Americas, slide 13, our market share was down 0.9 point at 5.8%, representing 24,000 units less than in Q1 2014. In Argentina, where we voluntarily limited our imports to reduce our exposure to the peso, we suffered from the high base of comparison of -- in Q1 2014, losing 17,000 units.
In Brazil, despite strong economic turmoil, Renault lost 8,000 units but increased its market share to 6.8%, carried by Sandero and Duster.
In Colombia, with Sandero first car of the B segment and Duster first car of the C segment, Renault moved closer to the top position in the market with 8.4% sales increase and 18% market share.
Let's switch to Asia-Pacific, slide 14. Q1 2015 was better than Q1 2014 by 4,000 units, thanks to the success of Renault Samsung Motors in Korea. The introduction of QM3 led to a 2,000-unit sales increase, and our market share in Korea was up 0.3 point to 4.3%.
In addition, the sales to Nissan of 24,000 Rogues manufactured in the Busan factory and sold in North America brought the significant contribution to the Renault Samsung Motors revival plan. You're going to see the impact in the revenue increase later on.
Before wrapping up this chapter on commercial performance, I would like to share our perspectives for the full-year 2015 on the slide 15. The European market growth was stronger than expected in Q1. Therefore, we forecast a 5% increase for full year instead of 2% previously.
At the opposite, the Russian and Brazilian markets should suffer deeper drops than expected. In this context, we confirm our 2015 initial commercial forecast, first, increased global registrations, second, strengthen the Renault brand in Europe, and third, improve our positions in our main emerging countries.
To support this ambition, we will benefit from the launch of five new models through the year, already in the showroom, the Espace; in the summer, Kadjar; and in H2, the D-Sedan in Europe, A-Entry in India, and a pickup in South America.
Thank you for your attention. I hand over to Dominique, who will now review our first quarter revenues.
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Dominique Thormann, Renault SA - EVP & CFO [5]
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Thank you, Jerome. I will start this part of the presentation with the variance analysis in first quarter revenues compared to last year on slide 17. As you can see, Group revenues were up significantly by 13.7% in the quarter from EUR8.257 billion a year ago to EUR9.388 billion this year.
The automotive division was the main driver behind this strong performance, with an increase of 14.3% in revenues. Our CI revenues grew at a slower pace of 5.5% due to the fallen interest rates, despite a quarterly production of loans equally at a very high level. But, as you know, revenue is not an indicator of choice to gauge our CI's activity, which I will detail later in my presentation.
I will start the analysis with the review of the automotive division on slide 18. On this slide, we show the contribution to the change in automotive revenues for the first quarter broken down by item. Reading from the left-hand side of the slide, the first item is foreign exchange, which impacted positively by 1.3 points.
This big improvement compared to last year, when the impact was highly negative by 5.3 points, came mainly from the weakening euro, despite the fall of the ruble.
The second item is volume. Jerome just showed you that global registrations increased by 0.8% in the quarter. But, due to a lower inventory reduction at independent dealers than last year, wholesale invoices increased more than registrations.
Next, the geographic mix accounts for a slight positive, as sales in Europe rose. The model and version mix effect is a slight negative, as our sales mix has been driven by new B segment products ahead of the renewal of the C and D segments.
The price effect was positive 2.1 points. This impact is mainly the reflection of price increases decided at the end of last year to mitigate currency weakness. This effect should lessen in the next quarters as the currency situation has moved more favorably.
Sales to partners contributed positively by 6.7 points and reflect the strong momentum of our alliance with Nissan and partnership with Daimler. The impact on this quarter was particularly strong, thanks to the Rogue assembled in South Korea for Nissan and Smart produced for Daimler.
The last item, others, represents the activities outside the new car business, mainly spare parts, non-new car sales, as well as restatements related to buyback commitments. It shows a positive contribution of 0.9 points, mainly related to the parts business.
If you turn to slide 19, you will see the usual seasonal quarter one effect, with an increase in inventories that reached 515,000 units versus 459,000 units at the end of last year. However, year-on-year inventories are down 12,000 units. In terms of number of days of business, we stood at 74 days versus 76 a year ago.
Maybe more importantly, the decrease in stock at the independent dealers versus last year was greater than at our own retail group, confirming the trend seen in previous quarters.
I will now move onto slide 20 and comment our CI's commercial performance. The number of new contracts written by our CI bank in the first quarter of 2015 increased by 14.2% versus the same period in 2014, thanks to the strong sales momentum of the Renault Group in Europe in addition to the increase of our CI bank's penetration rate.
New financings increased at a remarkably higher pace than the number of new contracts at plus 33.8% due to a higher per-unit loan amount.
Before moving onto the Q&A session, I will turn to the last slide, number 21, which shows you our outlook for 2015. As I mentioned in my preliminary remarks, the market in Europe is improving, but conversely, some of our main markets outside of Europe continue to decline severely. Given this context, we maintain our guidance for the full-year 2015.
This concludes our presentation. And now, together with Jerome, we're ready to take your questions. And I will hand the call back to the conference operator. Thank you very much for your attention.
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Thierry Huon, Renault SA - Director of IR [6]
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Thank you, Dominique. And now, we are ready for taking the questions.
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Questions and Answers
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Operator [1]
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(Operator Instructions). Kristina Church, Barclays.
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Kristina Church, Barclays - Analyst [2]
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Hi there. Yes, thank you for taking my questions. I've got two questions, one relating to price in your revenue walkdown, just whether you could expand on how much of that pricing improvement relates to just a general improvement in the markets and how much is specific to your -- you and your new model mix, etc.
And then in terms of the sales to partners, are you able to give any indication at this point a little bit more around the profitability of those sales to partners in terms of, are they ahead of your group profitability, in line? Any direction would be helpful. Thank you.
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Jerome Stoll, Renault SA - EVP & Chief Performance Officer [3]
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Yes, okay. Good evening. So, the -- regarding the prices, it's clear that, when you look at the -- on the snapshot, the main impact comes from the countries where there was some devaluation, I mean Russia and Argentina mainly, but Brazil as well, where we had a very aggressive price policy and maybe sometimes, especially in Russia, ahead of some of our competitors. And a large part of this price increase has been made late 2014. So, the full impact has been shown on 2015.
Regarding the rest of the pricing situation, let's say in Europe, it's clear that the market remain tense. There is still an overcapacity of production, yes, in Europe. So, the market, it stands. As far as we are concerned, we kept our price policy, price positioning policy. We are globally at the same level than we were at last year. I would say this is global.
When you look at model by model, the very positive things is that every new model launch is -- can attract better trading situation, position, where we can enjoy the attractiveness of the product. And this brings higher residual value, which has a very positive impact on the price because -- on the net price with offering less [VME] to compensate this lower residual value that we had before. The impact on residual value is in the range of 5 points to 7 points, depending on the car.
And the second thing is that, on the top of this, the good thing is that these products, new products, talking about Captur -- sorry, or Twingo, and even Clio, we are selling upper trims which has also a positive impact on the price positioning I would say.
Obviously, on the contrary, the aging lineup, let's say the C segment, is suffering more from the situation. And obviously, we are trying to keep the sales volume with some additional aggressive pricing policy.
The main target that we have, and I read plenty of statement coming from some of competitors regarding our pricing policy, the main -- we have to be careful with the methodology that is used by all the different carmakers.
As far -- when you -- the main difference that you can see with some of our competitors comes from the difference in methodology. And where we are with lower -- we are stronger in the smaller segment, A and B.
And when you look at the price positioning of the brand, you have to integrate the segment mix of sales of all the different carmaker. For the time being, we are a little bit lower than the others because we have just renew the A and B segment. And normally, the situations would improve a little bit with introduction of the renewal of the D segment first and, then after, the C segment, where we expect to have the same benefit of the renewal of the A and B segment that we enjoy today with Clio, Captur, and Twingo.
So, this is overall what I can say regarding the pricing situation. Dominque?
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Dominique Thormann, Renault SA - EVP & CFO [4]
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Yes, Kristina, hi. On the sales to partners, yes, I'm afraid I'm going to have to disappoint you because we can't disclose the contractual relationships that we have with our partners. First of all, these are private contracts.
The second reason is that you'd be comparing a little bit apples and oranges in that, if in the case of a vehicle made or assembled by a Renault factory in South Korea for Nissan, this is a vehicle that was engineered by Nissan, and it's just manufactured and sold to them. That would be very difficult to compare the profitability on that type of business with, say, engines and components that are manufactured to spec to different manufacturer specs, as we do, for example, for Daimler in Europe.
So, it's a bit of a tricky situation. However, I can assure you that all of our partner sales are profitable and that nothing is done at a loss.
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Thierry Huon, Renault SA - Director of IR [5]
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Thank you, Dominique. Next question, please?
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Operator [6]
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Thomas Besson, Kepler Cheuvreux.
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Thomas Besson, Kepler Cheuvreux - Analyst [7]
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Thank you very much. I have three questions, please, very quickly. Firstly, can you talk about the European leverage, the level of capacity utilization you plan for H1 2015 versus H1 2014, and what we -- you are projecting for the full-year 2015, please?
Secondly, almost the same question for the problematic markets in Russia and LatAm, can you talk about the evolution of the cost structure and your capacity utilization in both regions and what you're projecting for both the H1 and full year, please?
And finally, a question on currencies and in particular sterling, where your French competitor seems to be very happy with the ability to retain a large portion of that, can you talk about the benefits you're enjoying there and how much you think you'd be able to retain? Thank you very much.
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Dominique Thormann, Renault SA - EVP & CFO [8]
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Hi, Thomas. It's Dominique. I'm not sure I understand your sterling question. It's -- sterling's better today than it was, say, two years ago. But, what do you mean, how much can you retain?
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Thomas Besson, Kepler Cheuvreux - Analyst [9]
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What I mean is that the translation of higher sterling revenues in euros mean probably higher profits for you. What happens in terms of pricing in the UK? Are you able to effectively keep the benefit of a stronger pound at this point?
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Dominique Thormann, Renault SA - EVP & CFO [10]
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Okay. Now, that clarifies. So, that need -- I need help from Jerome on -- to answer you.
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Jerome Stoll, Renault SA - EVP & Chief Performance Officer [11]
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No, yes, Thomas, it's very simple. When you look at the market in UK, the first quarter, we enjoy a growth of 8.3% compared to last year. Our volume are increased by 17.7%. So, we are obviously catching back our previous position in terms of market share.
You remember that we were far above 5% some years ago. And we declined. And we restructured completely our commercial policy in UK, while -- when the pound was far too low and to be competitive and profitable. So, we had to adjust our commercial policy in order to preserve our profitability.
And now, we are in the far better shape because, okay, we are exporting to UK. And we are -- we can enjoy this situation of the currency, which has improved significantly our profitability in UK. I cannot tell you exactly how much we gave back to the market. But, frankly, the profitability has improved at the end for UK.
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Dominique Thormann, Renault SA - EVP & CFO [12]
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Okay. Thomas, on your two other questions, first of all, this is a revenue call, not an earnings call. So, on leverage, just for modeling purposes, Europe is more than the sum of all the other regions put together. So, clearly, Europe has more operating leverage than any of the other regions. And that's pretty self-evident. But, it's significantly more than the other regions.
And in terms of capacity utilization, what I'd like to do is to reference you back to what we told you for the plan for the three years. At the end of 2016, we are planning to be at 100% capacity utilization in Europe. We're on the glide path to get there. Currently, we're operating -- we're increasing, obviously, compared to 2014.
And it's not a straight line, but we were, for example, significantly over 100% in Russia, for example, in Eurasia. But, we're now in some of our plants in the region well above 100%. So, it's a bit of a patchwork. But, by the end of 2015, I would expect that we'd be somewhere in the 90s compared to where we need to get to by the end of 2016. So, we're just right within our plan targets.
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Thomas Besson, Kepler Cheuvreux - Analyst [13]
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Thank you very much.
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Operator [14]
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Charles Winston, Redburn Partners.
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Charles Winston, Redburn Partners - Analyst [15]
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Yes, hi. Charles Winston from Redburn here. Thanks for taking two questions from me, both really some matters of sustainability. Dominique, you talked about pricing perhaps being not quite as strong in future quarters because, as you say, some of the FX, particularly the ruble, has rallied.
Can you perhaps give a little bit more flavor to that? In other words, are we perhaps talking from 200 basis points to 100 basis points, or do we think, by the end of the year, we could be sort of fairly near stability? It's just how much of that pricing do you think you might need to give up? Hard question I know, but just to try to get a feel for that.
And then secondly, in terms of sales to partners, Nissan Rogue manufacture from memory started I think September of last year. And obviously, the Smart was very much a fourth quarter issue.
So, that suggests to me that the sales to partners growth, at this sort of rate, we should probably see it at least in 2Q and most of 3Q before the comps start getting -- suffer, and therefore sales to partners should perhaps slowdown again in the fourth quarter. Is that right, or am I missing something? Thanks a lot.
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Dominique Thormann, Renault SA - EVP & CFO [16]
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No, you're right on. That's exactly right. And I think the guidance we gave you on sales to partners is that you would see sales to partners in the aggregate for the full year at a higher level than 2014 full year. But, you're absolutely right. The comparisons in Q1, Q2, and Q3 are going to be much deeper than Q4, when things will normalize because we will have had Rogue and Smart production in last year. So, yes, you're absolutely spot on.
Now, in terms of pricing, you're in a bit extreme situation. So, you're right to point this out, which is why I said it in my remarks. Jerome told you -- the pricing in Russia, for example, was, like, 25%. So, you're talking about huge increases. But, then again, you had extreme volatility. I think the same was true in Argentina. And then we had a number of very, very extreme circumstances that we had to face.
So, this isn't something -- if currency volatility normalizes, then clearly, the pricing effect is going to lessen, as I said in my remarks. And you'll find that you'll go back to something that looks more like trend in the last few years, unless, once again, something radically different happens. And that's not what Jerome is saying as for Europe, for example, as regards Europe.
And since Europe is the biggest piece of it, I would expect that the distortion that's being created by the pricing that was decided in reaction to currency is going to progressively ebb over the next two and three quarters.
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Charles Winston, Redburn Partners - Analyst [17]
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Thank you.
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Operator [18]
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Horst Schneider, HSBC.
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Horst Schneider, HSBC - Analyst [19]
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Yes, good evening. Thanks for taking my questions. I have got actually three. And the first one relates to your increased European guidance. I want to know what gives you now the level of visibility to say that the European market will increase by 5% in 2015.
So, can we now assume for the next few quarters that the European -- no, or put it other way, I want to know basically what is the safety cushion that you build into this European guidance. Have you the feeling that is now realistic, or -- and policy assumption regarding the walkdown by quarter. Do you now expect that, gradually, the growth comes down, or that will be steady at around plus 4% -- 5% throughout 2015?
And then another question that I have relates to the currencies. We see the EUR100 million impact in the first quarter. And I know it's extremely difficult to make a forecast on currencies. But, just if you assume that the currency rates stay where they are today, could you give us some sort of guidance for the full year what could be the currency impact on the revenue line?
And the last question that I have relates to Iran. Since we discussed now politically that the sanctions could get relaxed, is there any chance that you'll return to Iran and that you can get the money out that is still stuck for you in the country? Thank you.
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Dominique Thormann, Renault SA - EVP & CFO [20]
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Okay, Horst. I'll take the easy question and let Jerome with the two -- your two hard questions. Currency, for modeling purposes, I would suggest that you kind of write in a zero plus if things remain where they are. Once again, highly volatile -- this is not a prediction, but this is just an assumption that -- we have no crystal ball on currency outlook.
If you have a different outlook, then you can write that in. But, if it's the mix of currencies that we have today and if it's straight lines for the rest of the year, put in a small zero plus.
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Jerome Stoll, Renault SA - EVP & Chief Performance Officer [21]
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Thank you for the two difficult question. Now, regarding the market, the TIV, obviously, it's very difficult. This is the best assumption that we have today to say 5%.
It's normally T -- Q2 and Q3 should be strong, but a little bit strong -- less stronger than -- less strong than the first quarter. This -- the uncertainty for me is Q4, where we are at par with last year, a little bit higher than last year, but not as big.
So, frankly, it's the best assumption that I have today with 5%. And obviously, if you look at the first quarter, we were above 8%. You can assess what you want. But, this is the best assumption that we have today.
Regarding Iran, Iran, okay, we saw that clouds are moving away. This is what we expect. And frankly, for the time being, we are still complying completely with the [intention] regulation, the embargo, and all that stuff and the difficulty to get the foreign currency to export to Iran. So, to be honest, this -- to comply strictly with this regulation makes our level of sales in March at zero. So, this is clearly an indication that we comply with everything.
Nevertheless, we believe that the situation will be -- will improve significantly. And we are ready to restart our operation as soon as it would be possible, ready with the current models, for which we have to export [KDs], but also ready with new products that we are currently discussing with our partners to take into account that Iran will become -- we expect -- will become soon one of the major market of the region, and we don't want to miss it.
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Thierry Huon, Renault SA - Director of IR [22]
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Thank you, Jerome. Next one?
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Operator [23]
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Jose Asumendi, JPMorgan.
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Jose Asumendi, JPMorgan - Analyst [24]
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Hey, thanks. Couple of questions, please. The first one, can you talk a bit about your outlook for the Brazilian car market and, specifically, production comps year on year in Q2? Do you expect them to rebound? And what's your outlook for the second half, please, if possible?
And second element, just coming back to sales to partners and without diving into each of the contracts, but maybe, as we think about the contribution to earnings on these sales, is it fair to assume that the dropthrough will be slightly richer in 2015 versus 2014? Thank you.
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Jerome Stoll, Renault SA - EVP & Chief Performance Officer [25]
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Okay. So, on Brazilian market for -- obviously, it's very -- here again, it's very difficult to predict. As you can see, this -- the starting -- the situation of this beginning of the year 2015 is really absolutely difficult to predict when you look at Russia, very low; Turkey, very high. So, Brazil is for the time being around minus 15, minus 16.
There is no significant reason why the market will improve dramatically because they are not -- as far as we know, they are not resolving all the major difficulties that they are facing economically, in the economic situation, I would say. So, for us, the market is minus 15, minus 16, but obviously, with an outlook -- a negative outlook.
In that context, we are trying to protect our position here -- there. The market share has slightly increased over the first quarter. We expect it to continue to slightly increase. We are strong with our product. And we have to take care of the after situation -- current situation, after. We do believe that the situation will improve one day. And we want to protect our network during this period of time. So, we are currently with our product lineup protecting our market share. And this is what we expect for the year 2015.
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Dominique Thormann, Renault SA - EVP & CFO [26]
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Yes, Jose, on the sales to partners, the only guidance I can give you is that, on the revenue side, there will -- that line will increase full-year 2015 compared to 2014. And the comparison Q1, Q2, Q3 will be stronger than Q4 because of the production schedules that started in -- at the end of 2014.
So, it will increase. And we've given that guidance since the beginning of the year. But, I have to repeat we cannot discuss profitability. So, I can't give you a dropthrough of that line to the profit level.
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Thierry Huon, Renault SA - Director of IR [27]
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Thank you, Dominique. So, I guess that there is no more question in the queue. So, thank you very much for being on the call this evening. And Alain and myself are available if you have further questions. Have a good evening. Bye.
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Operator [28]
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Ladies and gentleman, this concludes the conference call. Thank you, all, for your participation. You may now disconnect.
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