Renault SA (RNO) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Groupe Renault First Quarter Revenue 2020 Conference Call. I now hand over to Mr. Thierry Huon. Sir, please go ahead.

Good morning, everyone, and thank you for joining this first quarter revenue call for 2020. I hope that you are all in good health and safe. So this call is broadcast live [ in Investor Relations ] on our website. The presentation slide and 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 a key speaker this morning, Clotilde Delbos, Acting CEO and CFO; and Denis Le Vot, EVP, Regions, Sales and Marketing. Their presentation will last about 15 minutes and will be followed by a Q&A session. If we don't have the time to take everyone's questions, as usual the IR team will be around to take your calls later. I pass the call over to Clotilde for few opening remarks and a presentation. Clotilde, the floor is yours.

Thank you, Thierry, and good morning, everybody. Before reviewing Q1 commercial results, I would like to highlight a few things about the current situation on Slide 4. As you can imagine, we're experiencing an unprecedented situation as we have never been in such an environment in the past. Our visibility is extremely low, given that there is no certainty as to when we will be able to get back to a normal life. Of course, our absolute first priority from the beginning of this pandemic has been and remains our employees' health and safety. Our second priority is to ensure that the company will weather this storm and that the right action are taken to be able to resume business as fast as possible when the conditions are met. This is the reason why we're using the support measure put in place by the different governments in the countries where we are operating and why we're considering using the guarantees of the French state for a bank credit facility of several billions. Usually, the Q1 call is focused on the commercial performance and the revenues in period. But given these exceptional circumstances, I will share some information about our financial situation. However, I am sure that you will understand that I will not have all the answer you would like to get as the near future is highly uncertain. For this first quarter, our revenues were down 19.2%. Following an already slow start of our business in the first 2 months, the lockdown implemented in almost all the markets where we are present has caused a sharp decrease of our revenues. The decline of the global markets in the first 2 months of the year was already minus 15%, and we saw a strong acceleration of this trend in March due to the pandemic with a fall of minus 40% in the month. Regarding our financial situation, what I can share with you is that our liquidity position at the end of March stands at EUR 10.3 billion. This means that net of funds raised in emerging markets, our liquidity reserves has been reduced by about EUR 5 billion in the period. Beyond our normal seasonality, part of this cash burn stems from our decision to continue to pay our suppliers on time despite the fact that our revenue stream almost dried up mid-March. To limit the cash drain, we have implemented strong actions. We chose to put our production staff on temporary unemployment in almost all countries. We also decided to implement half-time work for a large part of our white-collar population in the support function, including engineering, while protecting key launches and crucial projects for the future. We are, as we speak, doing our best efforts to restart our operations. It is already the case in Portugal and Spain, and we are about to do it in France, starting with powertrain plants. Of course, this can only be a progressive and relatively slow process, but it is good news anyway. A few words about RCI. Once again, RCI is showing the robustness of its business model. RCI does not need new financing in the short term, and it is still able to go on financial market, if needed, as it is investment grade. At the end of March, RCI's liquidity amounted to a comfortable level of EUR 11.5 billion. About our full year guidance, our visibility on the impact of the pandemic on our performance has not improved. Therefore, our guidance is still suspended until we have enough visibility on the potential demand when the lockdown is lifted. I take the opportunity of this publication to confirm that the cost-cutting program I announced when presenting our full year '19 results should be presented as planned in the second part of May, of course, if the circumstance allow it. Last but not least, as you already know, Renault Board of Directors has decided to no longer propose a distribution of a dividend at the Annual General Meeting on the 19th of June. This is what I wanted to share with you before giving the floor to Denis to comment our commercial performance. Denis, the floor is yours.

Thank you very much, Clotilde. Hello, everyone. As for the TIVs, the first quarter of 2020 started slowly even before business was impacted by the COVID-19, as you can see on the Slide #6. As you can see on the slide, market volume in all our regions has declined sharply, except in Eurasia. Note that the month of March showed a very drastic acceleration of the decline in almost all regions. With the exception of China, Europe has taken the hardest hit and was down 26% in the quarter and 52% for this whole month of March. Spain, Italy, U.K. and France drove this negative trend, while Germany held a bit better. In Eurasia, Russia was slightly positive, and Turkey recovered from a very low base. Even in March, the demand was almost flat, which explains how the region ended the quarter with a positive performance. The decrease in Africa-Middle East-India-Pacific region sales was driven by a negative trend in India and North Africa, while South Korea resisted better with a single-digit decline. In March, the demand was up 24% in the region. In Americas, Argentina remained on the same heavily decreasing trend despite Brazil and Colombia doing relatively well in the first 2 months. Still, with the March impact in the region, the region was down 21% in Q1. Finally, the Chinese region demand was down 45% in the quarter and 49% in March as the lockdown took a strong toll on the market. Slide 7 presents the group sales per region. Groupe Renault's performance was in line with the market, with a decline in sales of 26% versus 25% for the market. However, this global situation hides large discrepancies between the regions. Indeed, Europe, Americas and AMIP regions were penalized by adverse country mix, and their performances were below the market. In Europe and Americas, our performance is also explained by a strong channel mix deterioration, which we did not want to follow in accordance with our stricter pricing policy. The retail part of the business declined much faster than the other channels. This has been particularly impactful in Europe given Dacia's primary focus on retail. As shown on the Slide 8, despite this dark environment, we've had some positive results in the quarter with our recently launched cars. Clio and Captur pricing has been significantly repositioned, and both cars enjoy a much stronger mix without losing significant market share. It is worth noting that these market share losses actually came from an unfavorable country mix as Southern European market declined way more than the Northern European market. Hence, this performance confirms the attractiveness of this product to our customers. New Zoe continued on its positive trend with 21,000 units sold in Europe in the quarter and market share gain. Outside of Europe, we would like to highlight the good performance of Arkana in Russia, Triber in India and XM3 in South Korea. To conclude this sales review, I am sure you understand that under the current circumstances, it does not make sense to make any market forecast. Of course, we are making scenarios, but the reliability is too low to be shared. All will depend on how quick and at which level the situation will stabilize in the near future. I will now pass the call over to Clotilde to comment the revenues.

Thank you, Denis. So let's now see the contribution of our different segments in the first quarter revenues compared to last year on Slide 10. As you can see, group revenues were down 19.2% in the quarter at EUR 10.1 billion. The automotive division, excluding AVTOVAZ, showed revenues down 21.3% at EUR 8.6 billion. AVTOVAZ's contribution was EUR 701 million, down 8.6% due to lower sales, partly offset by a positive ForEx effect of EUR 14 million. You see here a line on Mobility Services. This new segment in our revenue stems from the creation of a new business unit gathering various subsidiary previously mostly under the RCI umbrella. This Mobility Services contribution amounted to EUR 6 million in the first quarter of 2020. RCI revenues decreased 2% mainly due to a negative ForEx impact of EUR 19 million related to the Argentinian peso and the Brazilian real. I will now start the analysis with a review of the automotive division on Slide 11. We show here the contribution to the change in automotive revenues, excluding AVTOVAZ, for the first quarter, reading from the left-hand side of the slide. The first item is volume impacted for minus 14.1% -- 14.1 points, sorry. This impact of minus 14.1 points is less negative than the decline visible in the registration. As usual, this gap between registration change and volume impact stem from the change in the dealer stock. Due to the COVID crisis, this gap is bigger than in the previous quarters as the dealers held vehicles orders that could not be delivered. The second item, geographic mix, impacted our revenue negatively by 0.7 points. This is explained by the strong sales decrease in Europe and also by the good commercial performance in Eurasia, which has a lower selling price than the group average. The product mix was also a negative of 0.3 points. The price effect was positive by 2.8 points. This impact reflects pricing actions to mitigate negative ForEx in emerging markets, mostly in Argentina, as well as regulatory and content cost in Europe. Since the fourth quarter of 2019, this item is benefiting from our price approach, especially in Europe, starting with New Clio and New Captur. The impact of sales to partners was negative at minus 6.1 points. This can be explained by a lower demand from vehicles, diesel engines and component production from our major partners, namely Nissan, Daimler and Opel. The ForEx impact was negative 1.4 points. The strongest headwinds came from the Argentinian peso and the Brazilian real. The last item, Others, represent the activities outside the new car business and restatements related to buyback commitments. It showed a negative contribution of 1.5 points. If you turn to Slide 12, global inventories stood at 660,000 units versus 656,000 units a year ago. The backward coverage is not relevant given the very sharp drop in sales during the past quarter. This stock level, which is not a concern, should enable us to meet commercial demand as soon as the various confinements are lifted while awaiting for the full restart of our plants. As previously mentioned, this stock also include the vehicles ordered that could not be delivered because of confinement measures. I will now move on to Slide 13 and comment RCI performance. The number of new contracts signed by RCI Bank in the first quarter decreased by 10.4% as the business has been impacted by the collapse of the global demand. Logically, this translated in new financing, which decreased by 9.1% (sic) [ 9.9% ] to EUR 4.6 billion. But given the average duration of the financing contracts in portfolio, which is more than 3 years, and the good performance over the full year 2019, average performing assets were still on the rise with plus 6.1% at EUR 49.3 billion. Before moving on to the Q&A session, I will turn to the last slide #14. As mentioned in my preliminary remarks, our visibility is not sufficient to assess the impact of this pandemic on our financial performance. Therefore, our guidance is suspended until we have enough visibilities on potential demand. Of course, we will clarify the magnitude of this impact as soon as we can. This concludes my presentation. Together with Denis, we are ready to take your questions. I will now hand the call back to the conference operator. Thank you for your attention.

[Operator Instructions] The first question comes from Thomas Besson from Kepler Cheuvreux.

It's Thomas Besson, and I have 2 topics, please. The first is on the liquidity. Clotilde, please, there has been press reports suggesting that you're discussing with the French government about a multibillion loan that would be backed by the government. Can you help us understanding the time line for that, whether it would be coming before the May cost-cutting plan or after and how you can reconcile coming out with the cost-cutting plan with getting a government-backed loan? That's the first question. And the second question is a very quick clarification just on price mix and Others in your revenue gap. Can you explain why we don't see a positive impact on price mix from the positive developments, notably on Captur and Clio? And why the Others line is not benefiting from the decline in buybacks that may have made that Others line positive?

Thank you, Thomas. So on the liquidity, we have, as you have seen, EUR 10.3 billion of liquidity at the end of March, which is quite comfortable. And we usually have seasonality effect in the first quarter, so it was not a surprise that it was going down. Obviously, we don't have any visibility on the length of the crisis. Nobody has. So as there is a possibility to go get credit facilities with the French state backing guarantee, there is a very good reason, I think, to go and try to get some of these credit facilities, which could amount, as you have mentioned, to several billions. And we are going to go get it to be on the safe side, very clearly. We're working on it. It takes time. So it's difficult to mention and confirm whether or not it will be in place before we make the announcement, but I am confident it should be in place before we make the May announcement. Now you make the link between the May announcement and these facilities. In my view, there is absolutely no reason to make a link. The May announcement, which is linked to the cost-cutting program that we launched and need to launch in order to restore Renault's profitability had been announced before the COVID situation, and there is no reason why we should come back on this cost-cutting program. That's the first point. Second point, the French backing of loans is available to any company in France, and there is no reason -- without any condition, and there is no -- except for the renouncements to dividends, which we have done and which we would probably have done even without this link that could have been made by some people. So in my view, there is absolutely no link to be made between a credit facility which is offered to any company in France and a cost-cutting program which is not linked to the crisis. Now if I go to your second question, which is price mix. I'm not sure why you say that we don't see the efforts on the -- sorry, you're looking -- sorry, just going back to your question. You're talking about price mix or just price?

No, no. Sorry, it was the product mix. My question was wrongly worded. Product mix stand negative despite the benefit of these vehicles.

Okay. Well, okay. So that's clear. On the product mix, well, it's very clear. We have less -- these segments in the product mix is more Clio and Twingo and Captur. So the product mix as the average price of these cars, even though they are very successful, even though we have increased drastically the price of this car, then still below the average of the price of the group. So when you sell more Twingo, more Clio, more Captur, it goes -- it pushes your product mix down even though it has been slightly offset by more sales of Zoe. So that's basically the explanation. You cannot see the price increase of Clio and Captur in the product mix bar, but you see it in the price bar, which here is positive. And maybe Denis can add a few things, both on the product mix and on the pricing strategy, which is working very well on Clio and Captur. And I will take over your last question on Others after Denis has provided more elements on your question.

Yes, sure, Clotilde. As you can see, the 2.8 points of pricing as a pure FX is way above what we had last year. And what I would like to say is that despite the EUR 150 million of FX, as you can see on the left, that was very sudden at the end of the quarter, and that will be offset, of course, in the concerned countries as the months go by and as the business will start. As for the pricing, I would say 3 things. First of all, the Clio, as already mentioned, is 12 points above the former Clio we had last year, and the highest range of the car are plus 43% in the mix of the Clio. So the car is working very well, not only on the net pricing but also the mix. And Captur is even better because the start of Captur, even before the impact coming on the market, is 14% above last year as an average of the car, and we have 70, 7-0, mix increase on the higher range of the car. This is not only Europe. We also have cars doing a great job, for example, in Russia, which is one of the market that helped us. Arkana is for sale at above RUB 1.2 million, while the average of the Russian car we are selling is below RUB 1 million. So the mix is being distorted model by model. But the market mix, as Clotilde explained, with a lesser Europe and a bigger Russia, for example, have been playing against us as the average worldwide market mix.

Thank you, Denis. On the Others, there is a lot of things, as you perfectly know on the Others box. You have many things. You have parts and accessories, which is down for the quarter, in line with the decrease in the market and the sharp stop mid-March. You also have the retreatment linked to RRG. RRG is our internal dealership group. We are -- RRG stock is as full as the other external dealers, as you have seen in the inventory slide. And so it's a retreatment. Between that, you have sales in the first part of the slide and then RRG, so it's a negative, which, on the other hand, is offset slightly but not completely by the decrease in short-term sales and buyback commitments. So the buyback is indeed negative, but it is masked by the decrease in parts and accessory, used car vehicle sales and RRG retreatment.

The next question comes from Charles Coldicott from Redburn.

I just wanted to ask again actually on the liquidity. I think you previously said that the minimum gross liquidity that you'd want to hold is around 20% of revenues. Can you just update us on what you think the minimum you need to hold is? And then also maybe on the cash burn, the EUR 5 billion in Q1, can you just give us an idea of how much of that is working capital? And I'm sorry, if I can sneak the last one. You mentioned dealers are holding on to inventory and that they've not been able to deliver yet. Can you just give us an idea of how many units you think that is?

Well, I guess, in the circumstances we are today, the way we look at liquidity is to ensure we have sufficient liquidity, not in terms of percent of turnover because turnover doesn't mean anything right now because we don't know when the turnover is going to restart, but enough liquidity to cover the crisis. So I think you should drop the 20% of revenue because, indeed, there is no revenue as we speak. Revenue will restart and has restarted in some countries like Korea, like Russia, like Turkey, but we're more looking into the necessary liquidity we have to go through the crisis and the length during which the complete shutdown is taking place in some countries and the speed at which we believe we -- the commercial activity will resume. So that's how we're looking at liquidity, and that's why we're looking at not only in France but also in emerging countries, looking at additional credit line just to be on the safe side. On the cash burn for the first half, no, we're not going to give detail on how this has been split between working capital and the rest of the activity. I think we should look forward to the future and not to the past. And our cash burn, as I mentioned in the speech, is a lot lower than EUR 1 billion. It's EUR 800 million per month if everything was locked down worldwide, which is not the case. Once you take the activities that we have currently, it's closer to EUR 600 million per month. So you can imagine that we have sufficient liquidity to cover this cash burn. But it's true that in the first half, most of the cash burn is coming from working capital. As I said earlier, it is very seasonal. Every year, in the first quarter, we have a big working capital need, and it has also been the case in the first quarter. In terms of inventory, Denis, you want to say a word on that?

Yes, sure. As you can see on the Slide #12 of the presentation, the global inventory of the company is 660,000 cars, which is more or less what we had last year with 655,000. There is a little swing though that you may have noticed, which is 391,000 at the dealers, which is a little up, and 270,000 at the OEM, which is a little less. This is what happened actually during the month of March with the confinement, when the clients didn't come and take the car anymore, and we continued invoicing the network. I would like to say that despite the fact that coverage is certainly not an indicator that we can follow because both the past and the future markets will be totally different from what we used to have. We have a strong portfolio. This is important. Our portfolio is not in line with the crisis but it is in line with the past. So we still have a strong portfolio, both order by the dealers and order by the clients. We have very low, almost 0, level of cancellation since the crisis started, except short-term rents. All the dealers, all the clients have been confirming the order of cars. So I would consider this as a positive, very short-term asset, not only for us but for the dealers to start quickly making some offers as soon as the confinements are lifted.

The next question comes from Gaetan Toulemonde from Deutsche Bank.

It's Gaetan speaking. I have 2 quick questions. The first one is, I know you're going to disclose a little bit more in May about some restructuring measures. But in the meantime, what of the labor costs are paid by the government? I watch TV, there is no advertising anymore. So when we put all these type of things together, what are the magnitude of the cost savings you're going to do in terms of labor costs, advertising, SG&A or whatever we can factor in our numbers without waiting for the second part of May? That's my first question.

Well, thanks for the question, Gaetan. We're not going to give you details of what we save here and there. All I can say is that today, if I look at Q1, and it's not supposed, you know that, Gaetan, to be anything else but a revenue call. But we have already obviously implementing -- we don't wait for May to make cost savings. Let's put it that way first. It was the case before COVID, it's even more the case before COVID, obviously. And when I gave you the amount of EUR 800 million cash burn per month down to EUR 600 million when we take the little activity we are here and there, obviously we take into account the reduction of -- well, the benefit that we have of partial payment from states all over the world on the labor and the cost-cutting we're making. All I can tell you is that at the end of Q1, we already reduced our fixed costs, excluding amortization, depreciation and so forth by 10%. So we are on the path of doing what we need to do in order to reach the EUR 2 billion that are needed by the end of 2022. We have reduced obviously advertisement as much as we can in the second -- in the last part of the quarter. We're going to do the same in Q2. Nevertheless, we do hope that the activity is going to restart. And I remind you that we have great product coming in stream when the activity is going to restart. We're going to launch our E-TECH and hybrid version in -- as soon as the activity restarts, et cetera, et cetera. So we are saving costs everywhere we can. As I mentioned in my speech, all the plants are stopped -- were stopped at some point of time. Now they're restarting. All our white-collar in France and in other countries are in partial unemployment. That means 18,000 people in Ile-de-France, which are in -- yes, 16,000 people in Ile-de-France, which are in partial unemployment. They're working roughly -- 85% of them are working 50% of their time. So we're doing all the cost measure, which is needed in this period, and we -- but we will be ready to restart, both in the plant and to launch a product which are needed in order to sustain the activity when we come back.

Okay. So that mean we need to wait a month to get a little bit more clarification on some of those numbers, correct?

Yes. That's why we give you a date, Gaetan. It's to give you the -- to help you wait up until you get the exact information, very detailed information, on how those EUR 2 billion are going to be built and how we're going to achieve them.

Okay. Perfect. Second question, I want to come back on this volume effect. I'm a very simple-minded person. But registration, minus 24% in the first quarter, and you reported minus 14% in your numbers. Does that mean that, that spread will reverse in the coming quarters? Your volume effect will be worse than the registration at certain point to adjust those numbers?

Well, Gaetan, it's the usual swing between registration and invoices. Obviously, one quarter you stock, the next quarter you destock, because we're going to restart slowly, because we need to explain and have our employees get used to the sanitary measures. And we don't want to restart too fast neither until we see how the demand is going to go. So yes, there will be a point in time where the split between registration and invoice will reverse.

The next question comes from Angus Tweedie from Citigroup.

Just one question for me. I just wanted to ask on your, I suppose, own brand inventory. I know you disposed of some dealers in the quarter. Can you confirm if that is reflected in those inventories? And can you confirm the size of the impact if it was?

I'm not sure I got your question, I'm sorry. Could you say it again?

Yes. So looking at your, I suppose, consolidated dealer inventories, you disposed of a number of dealer sites. There was an announcement probably a month ago about a number of disposals.

Okay. Sorry, I got it.

And I was just wondering how many cars and when that will come through.

Yes. Yes, sorry, I didn't get your question. I get your question now. No. Yes, we announced our plan -- structure plan with already identified buyer for our internal dealership. But this -- you may understand that even in normal circumstances it takes time to make the negotiation with the buyers of this new dealership. So it is processing as planned despite the COVID, but no deal has been closed at this stage. So everything is still in our books.

Would it be possible to sort of roughly quantify the number of vehicles that might be held at those dealers?

Well, it's still in the books, so it doesn't really matter, does it? And we will -- so no, it's not possible.

The next question comes from Giulio Pescatore from HSBC.

This is Giulio. Just first one, sorry to go back on the dealerships, but I was just wondering, it sounds like there is a lot of pressure now on these dealers, right, because the inventory has gone up significantly as they're not able to deliver the cars, I'm just thinking. Are you helping? Are you helping the dealers in any way? Are you trying to support them from a liquidity side? That's the first question. The second question on the CapEx. How are you adjusting your CapEx plan? Are you trying to rephase the CapEx? Are you changing your model launch plan? What are the actions you're taking to protect liquidity? And then maybe just one last one. On the share of EVs, I mean it looks like you made quite some good progress on EVs. It was pretty decent result, the one in Q1. Just maybe if you can give us an update on how far you are from compliance? And are you actively asking the European Union for a postponement of the target?

Okay. I will take the question on the dealer help. I would propose that Denis takes the question on the launches, and I will take the question on CAFE. On the dealers, the good thing when you have an extremely good relationship with your dealer, which is Renault case, plus a captive like RCI is that you can assess what is the necessary measure that you need to put in place to support the dealers. And this is what we do with RCI, which is giving them an extension of their flow plan in order to pass through this difficult period so that they will be in very good shape to relaunch the activity whenever we can relaunch. So there is -- this is the way we're working with our dealers with the help of RCI. On the launches, on the CapEx front, we have reviewed, obviously like everybody, our R&D and CapEx plan. It was already the case before COVID, but we have reviewed a second time because of the COVID in order to sort out, if I may say, which are the crucial project that the teams need to be working on in order to put the rest of the team in partial unemployment. So Denis, you want to say a word of what we have favored, which is basically the launches of this year and the very crucial one that we have in the portfolio. Denis?

Yes, sure. What we -- as you rightly said, the engineering has not completely stopped working during this confinement. So we have been continuing with limited teams to work on the development, homologation and the internal procedures for our main strategical product. And at that moment, we have a very good visibility on keeping the pace on the most important launching. And that is -- you know that we already are full speed with Clio, the Captur. But the most important thing coming right now is during this summer, we are going to launch the E-TECH family, which is namely the PHEV of the Captur, the HEV of the Clio and the PHEV of the Megane station wagon. And also, on the second half of the year, at the end, we're going to be launching the Twingo BEV, the pure EV of the Twingo, as well as a small Dacia Spring that you heard about. So these cars are very important in Europe for the business, for our commercial strategy and also, of course, for the CAFE regulation.

Yes. So everything else has been stopped, to be clear, both in R&D and CapEx. So we are making the sort between what is crucial for us for this year for -- and for CAFE, that links to your last part of the question. So we believe that with the launches that are coming on, which are ready to go whenever it's necessary and whenever we can sell them, we will be in a very good position to attain our objective in terms of CAFE for the year 2020 and 2021. Does that answer your question?

Yes. So you're not actively asking for a postponement of the targets. Can you confirm that?

No, we're not. Not at all.

No. No. Not at all.

I do confirm, we're not asking for postponement or report or whatever of the target of CAFE for 2020.

The next question comes from Stuart Pearson from Exane BNP Paribas.

Just wanted to talk about, firstly, on the cash flow side and just -- and the inventory point, because the 660,000 units, that's -- it's the highest you've had obviously since June '18, and obviously demand will be lower in Q2. So in terms of production, it looks like it's still relatively high in Q1. So I presume that in Q2, as you say, it will be a progressive ramp-up. So thinking about that May and June production, it seems logical that we're going to be looking at more working capital outflows in the second quarter of the year. So if we had EUR 5 billion of cash burn in Q1, it seems like it's only going to get worse for the half year, but correct me if I'm wrong on that. And then I mean just thinking a little bit beyond that, much past the peak of the crisis, so I wonder if you could give us some kind of indication or color on what level of demand you think you can break even on a cash perspective? So is it 30% below 2019 levels? Is it 40% below 2019 levels? What the ex working capital is? At what level of demand you get that EUR 600 million of cash burn per month to 0? And then finally, just on the credit losses side, you might have noticed, so Daimler prereleasing last night, taking a EUR 400 million provision to boost its credit losses. I guess that will be a common feature of this reporting season for those that do report earnings. So I wonder, is that something that we should expect from RCI as well? I'm not sure where their credit loss provisions are relative to receivables right now.

Well, on the inventory, I think it looks maybe high, but versus other references, and, Denis, correct me if I'm wrong, we have a lot of orders, very strict orders, strong orders, which were supposed to be delivered in this 660,000 -- that could not be delivered at the end of the minute. So it looks high but a big portion of that is really orders which were about to be delivered and could not be delivered. So that's the first point I would say on the inventory. On the cash flow, I think it's very difficult to say because it really depends on the activity. Obviously, in April and May because we're still paying our suppliers, as I said, we don't want to postpone any payment to suppliers, the working capital should be negative, but it could be very well positive in the month of June if the activity restart as we speak. We're testing everything that needs to be cut, but it's very difficult to say more at this stage because nobody has any visibility. On RCI, we're very prudent on what we do, obviously, in terms of losses. So far, at the end of March and beginning of April, we haven't seen any deterioration on the credit loss. We have been prudent as we have to with the IFRS obligation, I would say, in terms of reserve and provision, even though this is supposed to be an earning call. But RCI has a good habit of being extremely cautious on this front. And today, I don't expect big topics on that. The only country where we are watching more closely, I would say, is Brazil, as usual. But for the rest so far, there is no alert.

The next question comes from Philippe Houchois from Jefferies.

My question was also on this credit loss, and you partially answered it to Stuart. Can you tell us though what you've observed? We've seen in the U.S.A. a precipitous fall in used car price index partly because auction houses are closed right now. What do you see though in the market in terms of used pricing? Both on the demand side, it seems like registration of the -- or transactional used price have held a bit better than new. And if you can give an indication on the pricing, that would be great.

Denis, you have any information on used car?

There is much less volatility than you have in the U.S., right? So as far as we are concerned with our buyback, this is not really an issue so far. And we haven't seen drastic move, as you can see in the U.S., in Europe as well, mostly European from that standpoint. And the residual value that we have so far are rather good and improving.

And Clotilde, maybe on this additional borrowings that you're looking at with the French state guarantees, you haven't drawn your credit lines. You've got, I think, EUR 3.5 billion of undrawn. Are you looking at those loans because you need more than that? Or to what extent do you take into account that those loans will certainly come with strings attached in terms of your strategic flexibility or freedom? So how do you balance the fact you haven't drawn the lines and the amount of no-strings-attached borrowings you might be getting from the French state?

Well, yes, you're right. First, we haven't drawn our additional undrawn credit lines. That's for sure. Second, I think it is our duty to be on the safe side and to cover even black, black, black scenarios, I may say. As the French state has provided such a facility to any company in France, I think it is our duty to make sure that we're on the safe side. So that's what we're doing. And again, there is no string attached to these facilities, except for the request of the French government to any company of not paying dividend if they're using the French state help, which we're doing. So for me, there is no string attached, and I think it is our duty to be just on the safe side. Nobody knows how long it's going to be. If there is a longer blackout, if there is a very slow restart, even though we believe the governments throughout the world, not only in France, are going to be doing whatever is necessary to help consumption to restart not only for cars but for many other elements. So I think we should go -- we should be on the safe side. And again, there is no string attached. And we're not -- and even if we -- it's a credit facility. It's not because we have signed a document that says we can use it, that we will use it, right? We're going to take -- we could take it, plus or minus, depending on the situation. For me, it's just a safety net which should be put in place and nothing else. So yes, Thierry?

Yes, I think we are getting to the end of this call. So thank you for all these questions and answers. And Clotilde, if you wish to say a few words for closing the call, the floor is yours.

Yes. Thank you, Thierry. So as you can see, okay, we've been hit by this crisis, like anybody else, but I think we have put in place all the necessary measures in order to reduce our cost. First, put up our employee in a safe situation. That's the first and foremost important thing. And cut our cash wherever possible in order to reduce the cash burn, which we have done, as you have seen. And now what we're doing is indeed putting in place the necessary measure, first, to ensure the liquidity in the case that there is a stronger negative scenario versus what we have in mind. And then, we're preparing the restart, and this is very important. We're preparing to restart with the right cars coming in stream, as I have already mentioned. And with the right process in our plants, in our dealership, in our offices, in order for the people to be on the safe side. So I'm quite confident that in a few months, the situation will look a little better than what we have today for the Renault Group and for the whole automotive industry. Thank you. That's all I wanted to say.

Okay. Thank you, Clotilde. Thank you, everyone, to be on this call this morning. So as I said at the introduction, if you have more questions, feel free to call us today or tomorrow. We will be around for taking your questions. And in the meantime, stay safe. Goodbye, everybody.

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.