Renault SA (RNO) Earnings Call Transcript & Summary

So hello, everyone, and thank you for being with us. I'm actually thinking at 1st of July 2020 when I first came in the company. We just lost EUR 8 billion in 6 months. And I remember concerns here in the eyes of my teammates, some kind of hopeless comments in the media. And not a lot of people giving us at that moment, at least many chances of rebounding. Of course, it was understandable. The context was also not the most favorable one for a car company hit by heavy governance and financial turmoil. 2 waves of pandemics on top, semiconductor crisis, Russia exit, inflation coming back, market down and no product to launch for the first 18 months. So luckily, I can say today that we have made it. This is, I think, the beauty of the automotive industry. It always gives you a chance when you do the right things. It is for me the third time that I have the privilege of participating in the engineering of a turnaround in my career. But this time, it has a special taste because Renault is a special place for me. And because we have created, I think, internally a dynamic that will bring us where we had never been before. I would like to dedicate these results to the people who -- internally who never lost the hope. And to the ones externally, we have never stopped believing the potential of this glorious company, where there was suppliers, dealers, investors. In 2022, our profitability reached 5.6 points. These are 6 points more than 2 years before and twice as much as last year, EUR 46.4 billion of revenue. In other words, while our turnover was growing by 11%, our margin was increasing by 125%. We generated EUR 2.1 billion of free cash flow coming back to a net positive financial position, which is good. In 2022, I think we have turned the page of -- on the first phase of the Renaulution plan, what we call the resurrection, and we did it well ahead of the schedule. We are out of the emergency room. We are back in the game. And now we are ready to fly and to raise. 5.6% profitability, just to put it in the context, this is among our best years in 2 decades, and EUR 2.1 billion of free cash flow generation for Renault is actually historic. We have made more cash in 2 years than in the previous 10 years. The machine now is designed for stormy weather and the team likes wet trucks. Remember, when we went out of Russia in April, some said it was the knockout jab for Renault. 7 months later, we have more than compensated the shock. These results are above the consensus and much better than initial expectations. We started the year with a guidance at 4%. We downgraded at 3% when the conflict in Ukraine broke out. And finally, we doubled down. Our free cash flow generation also, as I said, is at an historical level, and we are finally, cash rich. We are here because for 2 years, we have been obsessive at implementing our plan consistently with discipline. As you know, it rests on 3 key levers. First, we have improved our go-to-market strategy. Second, we have been smart at developing the best ever product portfolio with the limited resources we had. This one, you will see from now to 2026. And finally, we have made a huge work on costs. Let's start with our go-to-market strategy or as we say, from volume to value. We keep on improving our product mix. C and above segments now represent almost 40% of our passenger car sales worldwide. We'll get quickly over 50%, like the best-in-class. We learned that selling entry price cars maybe not a good idea. So high end [ version ] of our new product, making now over 70% of the mix. These are unbelievable numbers. We focused on improving our channel mix. This year, retail where you really have to sell and people really have to buy and to choose you account for 67% of the Renault Group passenger car sales in the G5 in the big 5 countries. This is up 9 points from 2021, up 15 points from 2019. The bottom line is a historical high impact on our revenue with a 13-point positive effect raising from pricing and product mix. So again, this year, double digit. There are a lot of discussion about electrification happening in the industry. We are just doing it. In Europe, the Renault brand electric and hybrid mix is sky rocketing. It moved from 4.5% in 2019 to 39% in 2022, 9 points in 1 year, all of this before the new generation of product kicks in. We have one of the best CAFE performance in Europe, and it will get better. The deployment of our product strategy is also, I think, pretty reassuring. For the past 2 years, I can say that all the new launches so far were above our internal expectation, and also from a volume point of view and from a financial point of view. For the present, I can say two things. As we speak, our order bank is above 3.5 months with a tendency to grow. In 2022, the average net revenue per vehicle increased by 33% compared to the beginning. For the future, I can only say that all the projects we are working on are on time and showing a performance above initial expectation. Only 2 of them have already hit the market, Megane E-TECH and Austral. But let's be a little bit more precise on that. First, Arkana, we sold 86,000 units in 2022 in more than 50 countries. In Europe, 65% of them were hybrids. Megane E-TECH is the first, I would say, as what we call a Renaulution car. And it was the, this year, the first EV in France in the second semester, #3 in Europe in its segment. We already received almost 50,000 orders in 6 months, and over 70% of our customers go for high trims over 80% for large battery showing that Renault can sell cars above EUR 40,000. Austral, who is also a major launch for us. It's just out in only 50% of the markets and we already got 26,000 orders since November, 65% E-TECH hybrid and over 60% of our clients went for the highest version. Dacia. Dacia is a never-ending success story, still on the rise [indiscernible], with almost 8% market share in Europe for retail passenger cars, it has reached an all-time record. It's now the #3 brand in Europe in retail. The Sandero with 230,000 sales remains the best-selling vehicle to retail customer in Europe since 2017. And Jogger, which is, as you know, the most of all of 7-seater in Europe is the brand new star with almost 60,000 units sold in 2022. Let's finish with Alpine. t's been growing for 3 years, reaching a record level of orders with sales up 33% versus 2021. In France, the A110 is the best-selling sports car. It is in the top 5 in the sports [indiscernible] segment in Europe. We celebrate this year, 60 years of the A110, and we introduced 3 limited edition. All 3 have found buyers in less than 30 minutes. The kind of funds excitement you only see with brands like Lambo, Ferrari or Porsche. Since we have revised the Alpine brand, we are putting in place one by one all the ingredients to make it one of the next big things in the sports car business, high precision manufacturing sites, the reignition of automotive passion with Alpine entry in Formula One, an expanding network with 40 new outlets opened in 2022, bringing the total to 140, the international expansion of the brand with 2 new countries in 2022 and the ambition to go beyond Europe. And finally, a new thrilling all-electric line up coming up from 2024. Let's now kind of lift the hood and I will look at how we made Renault a competitive organization. We are already, I think, on an another planet compared to the start with the Renaulution plan, we have lowered our breakeven point by 50%. This is again unprecedented at Renault. This year, we also achieved our best margin on variable costs in euros per unit in 10 years. This represents EUR 1,000 additional per vehicle versus 2020. Finally, we have reduced our capacity by 1.2 million units since 2019, taking our plant utilization rate at almost 100% for 2023. And don't worry, I'm not going to go backwards. On the contrary, we are going to stick to the discipline that helped us get back on track, and we will continue the job. We keep pushing to improve our performance in every domain. Take energy efficiency, for example. We have not waited for inflation on energy prices to become a problem. We started end of 2020 as part of our Renaulution program. We now consume 14% less energy to make a car, and we know we are amongst the best in the industry. And we are on track to achieve our objective to reduce by 30% our energy consumption by 2025. Cost reduction, energy efficiency, strategic autonomy and decarbonization, we think go hands in hands. We consume less energy and the part of the renewable energy is actually growing. Let me give you just two examples of flagship projects. First, thanks to our partnership with Voltalia will cover up to 50% of the electricity used by our plants in France through photovoltaic energy in 2027. And second, we'll replace 65% of the gas consumption of Douai with deep geothermal energy in partnership with ENGIE. This is also pretty unique. And talking about decarbonation, on the scope of the company, I want to tell you about -- I think, a major achievement of Renault Group, something that makes us very proud because since 2010, we have already cut our life cycle emission by 25% worldwide. This is unique in the industry. It's the result of over a decade of investment in electrification and CO2 efficiency, and it puts us on track to achieve our ambition to be carbon neutral in Europe by 2040 and worldwide by 2050. But to really put an end to Renault [ last chop ] then meets the resurrection and to clear up the road ahead, we just needed to do one more thing. And we needed to give a fresh start to our alliance with Nissan and Mitsubishi. That's what we did with the deal that we have just announced with our partners. As I said in London 10 days ago, you can see the deal as a 3-stage rocket. On top, you have the new governance, much more, I would say, straightforward allowing to operate in a normal and balanced way. Then comes the middle stage. It's the philosophy of the new alliance. It's very pragmatic. Each company is free to develop its own initiatives. The others can join every time it makes sense for them. The key idea is to foster strategic agility and mutual benefit. Ampere, I think is the best example. Renault creates it because it is the most promising and value-creating project we could dream of. So we go for it. And now Nissan and Mitsubishi are jumping on the wagon because they recognize that this is a fantastic opportunity for them in the European EV and software race. But the most important, actually, is the base of the rocket. The common reload projects, operational projects we have agreed to execute together. I want to underline it very, very clearly. This is the most important fang of the deal. This project, having the potential to generate hundreds of millions of euros in value in the mid-term in Latin America, in Europe, in India, cars, services, technology. And [ fickle ] economy which was one of the things we have been discussed. There is, I think, no limit to the thing. So now that all the planets are aligned, I think the best part of the Renaulution can start. I will tell you a little bit more in a few minutes, but I prefer to leave the stage at this point to Thierry. Thierry, the floor is yours.

Thanks, Luca, and a very good morning to everyone. Before commenting our financial performance, I'd like to remind you the impact of our Russian automotive activities on our financial statements. I won't comment in detail these figures as we already shared them with you during our H1 presentation. I just remind you that the result of discontinued operations represented on our 2022 results, a noncash loss of EUR 2.3 billion booked at the end of H1. Most of it related to the impairment of the goodwill and tangible and intangible assets in the Avtovaz and Renault Russia businesses. All the figures that you will see in the rest of the presentation are compared to 2021 adjusted for Russia. And you'll see that our 2022 performance more than compensated the associated impact. Not many would have bet on it just a few months ago. So let's start with the sales figures. Overall, 2022 has been another challenging year for the automotive industry. In this context, the group registered 2.1 million units in the year, a 5.9% decrease over 2021 at constant perimeter. However, in Europe, on the C segment, Renault Group sales rose 23.1% versus '21, reaching 422,000 units. As Luca mentioned, it represented 39% of our sales and confirms the success of our offensive on this profitable segment across both Renault and Dacia brands. Let's look at the evolution by brand. Renault brand sold 1.4 million vehicles down 9.4%, mostly due to the electronic component situation. However, in Europe, the brand showed significant progress in the high-value areas, the growing electrified market, the C segment and the retail segment. In fact, Renault is the third brand on pure EV market and the second brand of the [ Ford ] hybrid market in Europe. Renault achieved its retail goal with more than 1 out of 2 vehicles sold to private customers. The retail mix rose by 8 points versus 2021 to reach 51%, which is 7 points above-market average. Outside of Europe, sales were stable versus 2021. They represented 43% of 2022 sales and benefited from a strong performance on its key markets, plus 8% in Latin America, plus 23% in Turkey, plus 11% in Morocco. Globally, Renault brand's exposure on the C-segment increased 21% compared to '21. This is driven by the successes of Arkana and Megane E-TECH. In the meantime, in a declining market compared to '21, Dacia recorded a 6.8% growth at 574,000 units, proving the success of its value for money positioning in the context of inflation as well as of the new brand identity introduced in 2022. Dacia is one among very few mass market automotive brands that have enjoyed growth in Europe in '22. Dacia launched 4 key models in less than 16 months, namely Sandero, Spring and Duster in '21 and Jogger in '22. Each one of these models contributed to Dacia's growth significantly. Finally, the brand also reached a significant milestone by selling its 8 millionth vehicle globally since 2004. Alpine reached new sales record in 2022 with more than 3,500 units sold, up 33% compared to '21. This confirms the robust growth momentum that has been underway since 2021 when the Renaulution plan was announced, driven by the launch of successful limited editions, top-of-the-range versions account for more than 2/3 of Alpine A110 sales. With the introduction of new markets, Alpine continued its international development and expanded its network with a sharp increase of 40% in number of outlets. The brand's key markets showed strong momentum with plus 42% in Germany, 39% in Japan, 43% in the U.K. France increased its sales by 32%. Limited editions of A110 are all a success, as Luca mentioned, and Alpine starts the year with a very strong order book. Finally, a word on our order book in Europe as a total group. As mentioned by Luca, it stood at record levels and remains at an unusually high coverage of 3.5 months, mainly due to the commercial successes of our lineup to the chip shortage and also to the logistics disruptions. Robustness in our order book gives us confidence in 2023. Indeed, we made some simulations with an order intake kept at minus 20% versus 2019. The order book would remain above 2 months of sales coverage throughout the full year 2023. In fact, now with an additional cut of 10% meaning an order entry at minus 30% versus 2019, we are now also able to remain above 2 months of sales for the rest of the year. On Slide #23, we show the revenue contribution by activity. Group revenue was up 11.4% compared to 2021 at EUR 46.4 billion. At constant exchange rate, it increased by 12.4%, enough to more than offset the exit of the Russian market. Automotive revenue increased also by 11% at EUR 43.1 billion. Mobility services contribution amounted to EUR 35 million in the full year versus EUR 24 million last year. Our captive finance company, Mobilize Financial Services posted revenues of $3.2 billion, up 10.2%, mostly driven by the rise in interest rates and an average finance amount per vehicle. I'll now review the breakdown of revenue for the automotive activity. Reading from the left-hand side of the slide, starting on fiscal year '21 adjusted from Russia, foreign exchange was a negative 1.2 points, mainly related to the devaluation of the Turkish lira and the Argentinian peso. Volume effect stood at 3.4 points, thanks to the commercial success of vehicles, coupled with an improved availability of electronic components. Due to outbound logistics tensions at the end of the year, wholesales outperformed retail sales, independent dealers inventories, therefore, increased versus last year. I'll comment the inventories dynamic in a moment. Product mix contributed roughly 3 points, mainly thanks to the successes of Megane E-TECH launched at the end of Q2, Arkana launched in Q2 '21 as well as the success of Jogger launched in the first quarter. This product mix effect clearly demonstrates Renault and Dacia's brand defensive in the C-segment. The price effect was a strong positive throughout all of 2022. On a full year basis, it contributed by almost 10 points. It reflects the continuation of the group's commercial policy launched in the third quarter of 2020 focused on value over volume as well as price increases to offset cost inflation and the optimization of our commercial discounts. It amounted to 12.1 points in H2 after 7.4 points in H1. The impact of sales to partners was negative 1.4 points. It's mainly due to the decrease in production of diesel engines and vehicles for our partners with the end of production of Movano for Opel and Talento for Fiat in 2021. The last item, the other bucket, represented a negative contribution of 1.8 points despite being partially offset by a strong aftersales performance, the negative impact is due, firstly, to the decline of the contribution of our own dealership network, RRG, following the disposal of branches in line with the announced strategy; and secondly, to lower sales of used cars due to their scarcity on the market. I will now comment on the group operating margin by sector. We more than doubled the group's operating profit, delivering EUR 2.6 billion in the full year, which represents 5.6% of revenue, up [indiscernible] points versus 2021. It improved sequentially from 4.7 points in H1 to 6.4 points in H2. The Automotive segment was positive EUR 1.4 billion or 3.3% of auto revenue, actually 4.2% in H2 compared to almost 0% last year. Our financing activity, Mobilize Financial Services delivered a EUR 1.2 billion contribution. In absolute value, this is the highest operating margin ever delivered by our FinCo proving its robustness and the value of this franchise. On the next slide, #26, provides a sequential view of the group and auto operating margins by semester. I think the chart speaks for itself, and further evidences the benefits of the group's fast transformation. Of course, we're still below some of our competitors, but this is not the end of the game. The volume effect stood at EUR 199 million. The most significant improvement in '22 though, came from the high level of price/mix/enrichment, which contributed for a total of EUR 3.5 billion. H2 performance represented a positive impact of EUR 2 billion, exceeding even our H1 '22 performance. The H2 effect was the largest incurred in 1 semester in mass over the last 10 years. It shows once again the strong benefit of our commercial policy. This impact includes the price increases to cover inflation, but more importantly, it reflects our strategy to bridge the pricing gap versus competition, the optimization of the discount scheme of our dealer network and crucially the success of our line up renewal, in particular, in the C-segment. Alongside this box, you can see the impact of costs, including raw material and input cost inflation. We more than offset cost headwinds, thanks to pricing mix and productivity, both in H1 and in H2. Consequently, this year, we achieved the best margin on variable cost in euros per unit for more than 10 years. The impact of cost was a negative EUR 2.3 billion with H2 representing EUR 1.6 billion. The largest driver was raw material price at minus 1.9%, particularly steel and to some extent, the increase on battery raw materials, such as lithium. The purchasing effect amounted to minus EUR 274 million due to inflation and tensions on electronic components more than offsetting strong productivity gains. Manufacturing costs increased by EUR 238 million, reflecting, again, the strong impacts of logistics and energy inflation partially offset by good productivity and lower amortization. In total, in addition to the EUR 1.9 billion of raw material increase, we estimate the impact of other input costs, of which energy components, logistics, to be close to another EUR 1 billion. R&D contribution was positive at EUR 34 million, a limited gross spending increase year-over-year, together with lower partners' contribution were more than compensated by higher capitalization rate, plus 4 points, and lower amortization. The SG&A impact was negative EUR 27 million and is mainly explained by the non-reconduction of 2022 -- in 2022 of partial unemployment subsidies received in '21. I'll comment on Mobilize Financial Services performance on the next page. To finish, the analysis, the last bucket named others, contributed negatively by EUR 70 million, mostly due to the accounting retreatment of sales with buyback commitments. It also includes a strong performance from RRG, thanks to the implementation of the new commercial policy and our work to optimize the network, a positive aftersales contribution and a positive impact on amortization from the IFRS 5 treatment related to the Horse project. I'll now comment the Mobilize Financial Services performance. Mobilize Financial services generate EUR 18 billion of new financings, up 3.3%, thanks to the 10.4% increase in average financed amount more than offsetting the evolution of the registrations. Average performing assets improved to EUR 44.7 billion, almost stable versus '21 level, thanks to the increasing level of new retail financings, balancing the reduction of dealer inventories on average over the year, resulting from the group's strategy aimed at optimizing network inventory levels. Net banking income was positively impacted by the focus on most profitable channels, bringing higher margins and by the nonrecurring impacts on swaps valuations, mainly coming from the interest rate increases in Europe. Cost of risk at 44 basis points remains at a very low level both for wholesale and retail. Overall, Mobilize Financial Services posted a record operating profit at EUR 1.2 billion, up EUR 38 million versus 2021. As a reminder, a noncash adjustment of minus EUR 0.1 billion on exposure to Russia has been booked by Mobilize Financial Services in H1 and appears on the associated companies line, of Renault Group's P&L. I'll now continue down the P&L with the other operating income expense item on Slide 29, which amounted to minus EUR 379 million versus minus EUR 253 million a year ago. The main drivers for '22 expenses are the following: firstly, restructuring provisions that stood at minus EUR 354 million versus minus EUR 426 million in '21. Impairments amounting to EUR 257 million versus EUR 139 million in 2021, mainly related to a Chinese facility. These were partially offset by asset disposals for EUR 202 million in 2022. These assets disposals like the previous year, mainly related to the sale of commercial subsidiaries of the group, branches of RRG and real estate. Our net financial income and expenses, we registered a net charge of minus EUR 486 million this year compared to EUR 295 million in '21. This deterioration is explained entirely by the impact of hyperinflation accounting in Argentina. Otherwise, the net cost of debt was stable. Regarding associated companies, Nissan's contribution in 2022 stood at EUR 526 million compared to EUR 380 million posted in 2021. Contribution from other associates was negative at minus EUR 103 million compared to positive EUR 135 million a year ago. It mainly includes the depreciation of Renault-Nissan Bank shares in Russia that I already mentioned. The net tax charge came to minus EUR 533 million versus minus EUR 571 million in 2021. The increase linked to the improvement of the pretax income was more than offset by net year-over-year one-offs. Net income from continuing operations was EUR 1.6 billion, close to 3x the level achieved in full year 2021. Net income from discontinued operations amounted, as already mentioned, to minus EUR 2.3 billion. Bottom line, the net profit parent share after tax came in at minus EUR 338 million. Now that the analysis of the P&L is completed, I'll turn to Slide 34 on the free cash flow generation. Cash flow from operations amounted to EUR 4.8 billion, up EUR 519 million, compared to 2021, reflecting the improvement in the operating performance. It includes an EUR 800 million Mobilize Financial Services dividend payment versus EUR 1 billion in 2021. Net tangible and intangible investments amounted to EUR 2.1 billion, mostly driven by a lower CapEx spend. Group net CapEx and R&D rate, excluding the impact of asset disposals amounted to 7.4% of revenue in 2022 versus 8.6% last year, which means roughly flat in absolute value. Assets disposals contributed EUR 408 million. You can see that the net investments were way more than covered by the automotive free cash flow. Change in working capital requirements had a neutral impact. We recorded a minus EUR 0.6 billion restructuring cash out in the year. As a result, the operational free cash flow was positive by more than EUR 2.1 billion. This is the highest level in 17 years. In fact, since 2005 and the start of IFRS, the performance is even more remarkable, considering the fact that it was achieved despite relatively low sales volume. The free cash flow improvement contributes ultimately to a significant improvement in our automotive financial position, as you can see on Slide 35. Net financial investments and dividends amounted to minus EUR 81 million. This includes a EUR 64 million positive dividend payment from Nissan and investments in new business developments. EUR 161 million of cash outflows were booked in discontinued operations. In total, our automotive net financial position improved by EUR 1.6 billion compared to the end of last year, and came back to positive territory in a significant fashion at EUR 549 million. I can tell you that as a CFO, it's an important milestone. If you turn to Slide 36, global inventory stood at 480,000 units versus 336 units a year ago. Due to outbound logistics extensions at the end of the year, an important volume of shipments occurred very late in the year, which means that vehicles that were invoiced did not have time to reach the end customers. As a silver lining, this situation will support a strong start in invoicing and registrations in the first quarter of '23. The liquidity of the Automotive division stood at EUR 17.7 billion on December 31, '22, a very comfortable level. In 2022, Renault Group made an early repayment of EUR 1 billion on the loan from a banking pool guaranteed by the French state in H1 and an additional repayment of EUR 1 billion in H2. The outstanding EUR 1 billion will be fully reimbursed by the end of '23 at the latest. Renault SA launched 2 successful bond issues on the Japanese market in 2022, one in June for a total amount of EUR 560 million with a rate of 3.5% and a maturity of 3 years. The second one was issued for an amount of around EUR 1.4 billion with a coupon at 2.8% and a maturity in December 2026. This later Samurai Bond represents Renault Group's first ever issuance of retail bonds targeted to individuals and stands as the second largest public offering of Samurai Bonds for retail outright and the first, excluding financial institutions. As we announced during the Capital Market Day in November, our ambitions will translate in turn for our stakeholders. Thus, we communicated a clear dividend policy. As a sign of our clear step in a new era, we indicated our willingness to restore our dividend payment in '23 for the full year 2022. We will, therefore, submit to the approval of our shareholders at the next general assembly, a dividend of EUR 0.25 per payable in cash. Then as we make progress towards our first priority, which is to return to investment-grade rating, the dividend will gradually grow in a disciplined fashion with a goal to reach 35% of group consolidated net income parent share in the midterm. Rewarding our stakeholders will occur in 2 ways. First, the dividend that I just mentioned. Secondly, we want to associate our employees to the performance of the company and our ambition to see their ownership grow to as much as 10% of our capital by 2030 compared to 3.8% at the end of '22. To reach our target, we started a Renaulution Share Plan, an extensive employee shareholding program. From this first operation launched in the fourth quarter of '22, more than 95,000 employees benefited from 6 free shares. Among them, more than 40,000 have also subscribed to shares at a preferential price of EUR 22.02. The success of this employee shareholding plan is a testament to the commitment of the group's employees and their confidence in its strategic direction. Employees now hold around 4.7% of our capital. Thanks very much. And now Luca will give you the outlook for the full year.

Good. Maybe I'm going to look at even a little bit further. So -- but let's start with 2023. We think that as Thierry anticipated we'll still face a relatively challenging environment; electric component shortage, cost inflation, especially on raw materials. I think they will continue to strongly wave, at least that's our assumption. But we'll keep on fighting. And we keep on fighting also with -- to cope with energy prices and also logistic issues. On the other hand, we are increasingly benefiting from our line-up renewal as I showed you before. And this year, we will add to the range, the EV of the Congo. We will introduce the new Espace in the summer, the Jogger hybrid and also the new kind of a new, let's say, CLIO. So what I would say, a strong design of the CLIO. And this has always been a very important product for Renault, the bread and butter that always had impact on the volume. As we said, the order book is full. And we've done the job to rightsize our capacity. So I think it's going to be tough, but we will continue in our dynamic in 2023. The group, we think is -- probably has the potential to be an anti-cyclical player this time. We aim at achieving a 6% operating margin or more than that and over EUR 2 billion of free cash flow generation. That's the target. We will do that with the market condition that we assume will be flat in Eurasia and in Latin America and slightly growing in Europe. I think we have restructured the company. We are also ensuring the offer side, a great lineup from the team of [indiscernible] probably, the best line up we ever had is coming. And I think then 2023 would be the year where we'll start building the future structurally. So what we dream of is creating what we call a next-generation automotive company. And what is a next-generation automotive company. It's a company designed to capture value where carmakers have been, let's say, not only where carmakers have been operating for more than a century, but all along the new emerging value chain. So of course, we will keep developing our traditional business. Actually, it's going to be even more competitive with Horse or then the new products. But now we'll start playing the new automotive sports, as I say. EV and software with Ampere. High-end EVs and racing technology with -- this is Alpine. New mobility service, this is Mobilize, and circular economy with The Future is Neutral, just to give you some. When we presented the, our revolution plan in 8th of November 2022, I heard a lot of comments about the risk of creating complexity with such an approach from analysts and media. I think that many underestimate the complexity embedded in the organization of traditional OEM after a century of history. So I [indiscernible] know when I came, I found the matrix organization with at least 4 dimension; functions, regions, brands and the alliance. Ask any thinker, he will tell you that beyond the third dimension, this is the territory of metaphysics, okay? So now what we are doing is that we are pushing down accountability near to the business within more compact teams that are focusing on what would really create value in the future. This is simplicity. And also, don't forget that we are building a layer of connected IT architecture. It will allow us to manage the group in a very progressive manner through data, bringing fluidity, transparency, consistency everywhere in the company. And this is also simplicity. This 4.0, as I call it, management tool is something pretty unique in the industry. So we are the only ones to do that at that scale with that level of ambition. That's also what our partners are telling us. Next-generation automotive company is also about creating open -- an organization that's open to partners and other sectors, not a company that keeps running on models taken from the past. For a long time, OEMs were tempted to delegate to suppliers looking for scale. Demand was stable, technology was mature. We will face an environment where volatility will be the new normal and the technology will be very evolutionary. That's why we build a system that is agile and is oriented to innovation, working with the best partners will enable us to co-create solutions to extend our value chain coverage, share cost, combined expertise across sectors and also boost innovation at all levels. We have already built, I think, an impressive network, striking more than 20 partnerships, since 2020. And I tell you, we are not stopping here. In 2022, we took our partnership with Google and Qualcomm in the field of software-defined vehicle to the next level. Qualcomm is going to invest in Ampere. And with Google, we could develop a car operating system based on Android automotive. We also proceeded on our coverage of the EV value chain partnering with Valeo for e-motors without rare earth, with ST Microelectronics and Vitesco for power electronics, with Verkor for battery supply, among many others. We are now, I think, recognized by the experts for an outstanding coverage of the EV value chain after 2 years of work. This horizontal approach, I think, is also key for our -- what we call it, our digital twin. Recently, we decided to implement, for example, [ SAP 4HANA ], for our finance platform. And we work with Dassault Systemes for the product development. And these are only a few examples. The results that we have presented today show that we are on track for our financial mid- and long-term ambitions. When I look at that after what we went through, I think I can say we have demonstrated to be a very competent, reliable and solid team. So the credit goes to all of them. From now on, we will work to position Renault back again as a leading company. What we have on our plate this year to execute our plan is maybe the biggest challenge the company has ever taken. It is -- may have been the most sophisticated corporate reengineering plan I've ever seen in my career, but I can tell you that no one at Renault is underestimating the challenge. And I can tell you also that people at Renault have much more energy now. 2022 has been, I think, a turning point. The start of a new dynamic. I can feel this mindset, new mindset every day. The restored pride, the enthusiasm and the willingness to move forward. So thank you for your attention. I think it's -- I'll open now to your question with Thierry. So stay with us for the Q&A also connected.

Good morning, everyone. We now start the Q&A session, and we will start with questions from the floor. So now Pierre-Yves Quemener from Stifel.

Congrats for the numbers. Three questions, if I may. On the bridge into '23, we had an outstanding price and mix effect in '22, roughly plus 13%, which was on the revenue side of EUR 4.8 billion tailwind, how should we think of these 2 drivers into 2023 and which of them should prevail? The next two are on capital allocation. Regarding your future dividend payment, you reinstated a symbolic dividend for the year, '22 paid in '23. You target 35%. I appreciate that your primary goal is to return to investment grade. When should we reach that 35% level? Is it reasonable to assume that it could be as soon as '24, for instance? And last, regarding the future proceeds for near 28% stake in Nissan, which should be segregated into a trust and sell down when I quote commercially reasonable, can shareholders expect to get a fraction of these monetized assets in time or you will keep everything within the business?

So for the bridge -- first of all, thanks for the question, and good morning. So for the bridge, we'll continue to have favorability in mix and pricing in 2023. Basically, what we forecast is a continued impact of inflation, although to a lesser extent, than what we expected in '22. We also anticipate negative ForEx exchange, but we're quite comfortable that we'll continue to be able to offset these headwinds with further pricing and mix. I think what you will see is that as the inflation we anticipate is lower than what we expected in '22, the pure pricing effect will be lower. But we will continue to work on the pricing, in particular, in the discount structure with the dealer network. But gradually, as the new vehicles come online, you will see an increased benefit coming from the product mix element. So I mentioned this year the impact of Austral -- the impact of Megane E-TECH, sorry, and Austral came very late in the year. Next year, you will have this full impact. So we'll have further lift from 4 years of Megane E-TECH, 4 year of Austral and hopefully, continued performance from Arkana and from Jogger. We will also have this year, the launch of the HEV version of Jogger, which should be a great addition to the portfolio. So we look forward to that. In terms of the dividend payment, look, I think it was important for us to mark that we had shifted into a new period, and that's why we announced the dividend payment in '23. You call it symbolic for us. It's a sign of not only the performance of '22, but the confidence that we've got going into 2023. However, as you say, and you're absolutely right, our priority is the investment grade. It takes a little bit of time, as you know, to restore the rating at the level that we would like to have it. So I would say '24 is probably too early to get to that level. I anticipate at least a couple of years before we get there at the very least. And then your third part of your question was on the proceeds of Nissan potential sales. Look, I think for us, it's more a question of funding the initiatives that we've got internally at this stage. We built a plan that's self-funded. We have an opportunity potentially to accelerate some of the initiatives that we have in the plan, thanks to tactical disposals of Nissan shares if the opportunity arises. And that's how we'll look at it, in particular, potentially on the software value chain, on the EV value chain. And so the goal will be that primarily, so there's no plan to do a special dividend or anything like that in the short term. The way we want to return performance from Nissan potential share proceeds would be to improve performance, and that ultimately will reward the shareholders at this stage, not through a dividend payment.

We'll now take the question from Thomas Besson, Kepler Cheuvreux.

Thank You, Philippine. I also have 3 questions. I'll start with a question for Luca. I mean we've seen a step change in pricing for BEVs with Tesla moving maybe faster than many people thought with more aggressive pricing in January. Why do you think they're doing that? Do you still see decent orders?

That's a question for them.

Do you still see decent orders for Megane E-TECH since they did that? And what do you expect the combined share of Tesla and Chinese OEMs to be in Europe for BEVs in '25? That's the first question. The second and third are for Thierry. You overproduced partly because of these big logistics issues you faced with industry in Q4, can you explain us the dynamic in terms of your accounts? How much did it help or not in Q4? How much will you underproduce as a result in H1? And lastly, capitalized R&D was at 49%, CapEx and R&D 7.2%, could you give us an indication of where both are going? I assume capitalized R&D should trend down with the launch of all these pipeline and capitalized -- R&D and CapEx should trend up slightly. But could you give us broadly a direction of how much it changes in '23, '24?

Look, I -- on the question on the pricing on Tesla and later the Chinese, it's difficult to answer, no, why they did it. But one thing I know is that if I would reduce the price of electric cars by 20%, you bang on my head, okay? But -- so they reduced the price of the 20% after having increased that by 20% 6 months ago, and everybody is clapping their hand too. I don't think it's very rational. I think we need to stabilize the pricing of electric cars at the beginning of the cycle because we are putting a lot of investment in things, so you don't want to create, let's say, an unhealthy business for the long term. So this is destroying value for the customer, for sure, when you do this on residual value, et cetera. Of course, they are trying to get maybe with products that are not produced in Europe under the threshold of some subsidies given by the government to boost the volume, but maybe they will do exactly the same they did 6 months ago and increase price again, we don't know. I hope they continue to reduce to 0. But we will continue to protect the value of our [indiscernible], even for our customers. I mean the demand is doing pretty well. We are happy with that. We have to continue, it's just the beginning. Of course, we are worried that EV market is not like exploding. So I think it's not a completely natural market. It still needs support from authorities, et cetera, from us. But we can't do that. We have to do this. And we have a good car. We work on cost, we work on the pricing, we work on the residual value. It's -- I think we have potential to continue to increase the residual because we don't push. So that's how we're [indiscernible]. The Chinese is a different story. They will come from the -- let's say, from the bottom, if you want. When you sell 200,000 cars in your own market and you want to dump 20,000 in another region, you can do it, yes. But I think we are facing as European OEMs, some form of a symmetrical competition, which we have to correct in a way and another. I'm not an expert of let's say, trade policies. But I kind of see that there is an asymmetrical gain here that we need to correct if we want to develop the EV European industry. and we are the first one that won that. Does it answer to your question?

On the overproduction, I wouldn't say we overproduced. I would say we undershipped. So our problem, just to be clear, is we can't produce enough cars. The order book is at 3.5 months. We have over 0.5 million cars that people are waiting for. So what happened is due primarily to transportation tension at the end of the year, we were not able to ship as early as we would have liked to. So we have a few tens of thousands of cars that are left in our own inventory, and then a bit more that's left in the dealer inventory. It's not going to hurt in 2023. It's a help in a way because we're -- it allows us to start the first quarter with a stronger order backlog, a stronger inventory available to our customers, whereas usually, we restart the year at a relatively low point. So to be clear, we're not -- this is not going to hurt in '23, it's going to help. And our biggest headache today is being able to ship the vehicles on time. And we anticipate that it will remain a bit of a tension throughout 2023 with hopefully a gradual improvement in the second half. On the R&D capitalization rate, as you know, we capitalize R&D from the point where the development of the car is reasonably assured to the moment we launch it, and we start depreciating at the moment of the launch. We've got 18 cars that are launched in the coming 3 years. And so we have a lot of cars that are coming in the phase where the capitalization is actually effective. which is why mechanically, the capitalization ratio is increasing. We're at 49%. Today, it's still a relatively low level. In the past, we've been up 56%, 57%. I don't think we're going to go back to that level within the period that we're looking at. So potentially a few points increase but not a massive increase.

[indiscernible] R&D and CapEx.

On R&D and CapEx, I think you saw the proportion of R&D and CapEx, the turnover this year. It's relatively low. I think it's driven by, obviously, good control from a spend perspective, but also timing on CapEx. So we should see increase in both R&D and CapEx in absolute value in the year '23, but within the range of our guidance of around 8% still.

We'll now switch with questions from the webcast. So José Asumendi from JPMorgan. You can open your mic.

Congrats on the progress done so far. Here Luca, hopefully, you can hear me well. But just a couple of questions. Luca, maybe you can start off, give us an update also on where we stand on Ampere and Horse? What are the next catalyst deadlines that you're looking to achieve, maybe on a 6-, 12-month view and about, especially about the Ampere IPO in the second half of the year. How do we think about the timing of it? And Thierry, can you speak a little bit more around the working capital inflow opportunity on a 12-month view, as well as can you revisit a little bit more the pricing power improvement potential you have in 2023?

Okay, Jose, Look, I think one of the things I have to say is that Horse and Ampere are -- have been thoroughly prepared for many, many months, okay? So of course, these are complex projects that now we have -- where we have to put the pieces together, but it's not something that we start now. It's something where we have made a lot, a lot of decision in 2 years to put ourselves in the condition to do that, okay. Time-wise, a Horse will come before Ampere, okay? So we plan to activate Horse by the summer. So we are doing internally all the stuff that are necessarily putting together the organization, having -- understanding a little bit the carve-out, we have to redo contracts with suppliers. I mean it's a pretty complicated nitty-gritty, let's say, exercise, but it's moving, I would say, smoothly and also with our partner. So I think it's something that by the summer, you'll be able to see materialized. And on Ampere, kind of the same thing, but I see a couple of months -- sorry, a few months of, let's say, of time gap between the two. And they will depend also on the market condition on the things. So we are right now evaluating what are the options for us. As Thierry said, we want to go for it because it creates really a pure player and a company that is really independent. This is also part of the story. You know why we want to go to the market because then you get the investors involved. You have the resources, but you also feel somehow responsible of running something that is different from the rest, it needs to be like this. It needs to be an autonomous company because we want to create really a pure EV player. So we look at ideally end of this year, let's say, but it will depend on the market conditions. So there's nothing spectacular a lot of nitty-gritty work. Then what I can assure you is that we will be continuing to let's say, share with you guys all the progress because we have a lot of opportunities to talk about that. So we probably have also a Capital Market Day describing what we want to do. So stay tuned, but we work. We are in the kitchen right now. It's not very spectacular, but the dishes will be very good.

The dish will be tasty. Hi Jose, on the working capital side. Since you gave me the opportunity, I take it to point out that the cash generation in '22 was done without working capital improvement. It was done in a pure fashion with a EBITDA covering investment. So I think that's a positive compared to previous performances in the past. I think if you look at the working capital effect, since COVID, it's been hundreds of millions of adverse because volume has constrained. And we're in an industry where working capital is a resource, so ultimately, if the volume does pick up, we should see some lift from working capital. We haven't banked on it in the '23 guidance that we gave you because we're assuming that volume will remain relatively constrained. If volume were to pick up, this would probably be a tailwind. Now on the pricing power, I would say, from a pure pricing perspective -- so we'll have to offset some of the pressure that we see from foreign exchange. We'll continue to work tactically on the repositioning versus the competition. I think we're almost there, but we've got some tactical opportunities to further tweak the gap that we've got with the competition. For example, in Dacia, where a lot of ground has been covered, but we might be able to do some additional work. I think very importantly, it's going to be on the back of new vehicles, right? It's going to be on the back of Megane E-TECH, of Austral. You saw the numbers that Luca gave in terms of the order intake on Austral, which is very encouraging. So I think that will give us an opportunity. The last thing that I wanted to mention, which is important for us and for the customers at the end, is that the residuals are improving. We gained 3.5 points of residuals in Renault, almost the same on Dacia. So for a customer who pays a monthly rate, this kind of -- is an offset to the price increases that we do. So as quality improves, and you might have seen in the deck, warranty cost is going down because quality is really improving, residuals are improving, which gives us an opportunity from a pricing perspective also. So we're pretty confident that we still have some opportunity coming into '23.

Thank you, Thierry. We now have questions from, Horst Schneider, Bank of America.

Can't hear you. We can't hear you.

You are on mute, Horst.

You look great, but [indiscernible].

You're still on mute, Horst.

Can you hear me now?

Yes, it's fine.

Yes. Yes.

Thanks Luca, I appreciate it. I have got -- first of all, on [indiscernible]. You say that [indiscernible] is slightly up market share in the last 3 years. Does that mean that you're going to grow more than market [ history ]. I hope you can hear me. [indiscernible]

I got the sense of it, because it's chop line. It's actually chop. Yes. I mean I think that -- I think that -- let's say, we really have a chances to, I believe, it grow more than the market. I mean, I think we have the lowest. We -- you now know because we will still have some constraints, we estimate. I think with this year, we lost probably 300,000 cars because of the many issues. Maybe this year will be between 100,000 and 300,000. It will continue to be constrained for everybody. But we -- I think we are at the lowest point. And you have some products, a facelift of the CLIO sounds like not a big product, let's say, news. But for Renault has always been a boost for example, in [indiscernible] because you have millions of cars on the road. Espace is going to be a much more, let's say, sellable car than the one we had before. Very logic, very competitive, et cetera, the Jogger with the hybrid, the, I mean we -- and I think we're already. But what I try to explain all the time, is that by end of 2023, '24, '25, we will have an array of products that we have never had in the history -- recent history of Renault. And it happens because I remember like 2.5 years ago, I entered the room there in the design with [ Gilles ] in July. And we actually reinvented the old range in 6 weeks. You remember? And so that means that we are doing everything at the same time. So it cannot be that we go backwards in volume. You understand? I actually think that the issue would be for us to manage all this launches also commercially, but there is no reason why mechanically, Renault should not go better, both financially, but also from a volume point of view. But I never gave a target of market share of volume to the teams because I don't want to wake up the monster that was in the house before. I actually wanted always to focus on people creating value for us and for our customer, right? And it worked. I mean we do more money with 2 million cars than what we used to do with 3.4 million, 3.5 million. So it proves that it was the necessary, let's say, how do you call it, detox treatment. And now we can structurally in a healthy way take advantage of a wave of new product and put Renault at another level also in terms of turnover size, profitability, et cetera. We have to deliver 2025, 8%. We are at 5.6%. I think it's, I mean it's possible, depending -- but 8%, we have never done ever, ever in the history of the company. So -- but I think we can do. So I hope it answered your question.

We'll now take questions from George Galliers, Goldman Sachs.

And apologies, I'm not allowed to turn on my camera. But just in the context of what you just mentioned, [indiscernible] obviously a very good [indiscernible]. You're targeting over 6%. Should we think about as 300 basis points being quite linear [indiscernible] or will that perhaps be front end loaded or up at the end. Then second question I had was just with respect to the dividend from Mobilize. I think in the past, you suggested that the dividend in 2023 might be [ better ] than the EUR 800 million expect given the strong performance [ verbalize ] in the second [indiscernible]. Is that still the case?

On the first one, the profitability side, you want to answer or let me answer. Okay.

I hope I understood you were breaking up, George, but I think the question was around the linearity of the profit improvement. I think that's probably not far from the truth. So it's kind of what we're aiming at. Hopefully, that answers the question. On the dividend...

Maybe we can try to do it as we have done so far a bit earlier than planned. That's -- but we don't want to do this kind of things, right? But so, our commitment is to do stuff quickly. So far, it worked.

So we're not slowing down. Never. On the dividend from Mobilize, for modeling purposes, we used EUR 0.5 billion of dividend per year going forward. I think that's still the view. I mean, there is a -- it's a business that requires some investment now to develop new mobility activities, et cetera. So there's no change in our perspective. We built the guidance that we just gave you for '23 with EUR 0.5 billion of dividend.

We'll now switch to Stephen Reitman from Societe Generale. Stephen? Please could you open your mic? Stephen? Okay. So we will now switch to Pushkar Tendolkar from HSBC. Pushkar, could you open your mic please?

So I have a couple of questions. The first one is about the product mix and especially the trims. Luca, at the start, you mentioned the 70% high-end trim mix, a very high E-TECH mix and also a very high retail mix. These look quite high at the moment. How do you see that developing going forward? Or are we at a peak because the interest rates are going up, lease amounts are going up? That's my first question. And the second one is on the inventory at the dealership level. That's quite high at the moment. Is it all because of the logistic issues? And will that get resolved in Q1, so that we have a very high retail sales growth but a lower whole sales growth.

Well, I can answer both, I think. I think that the target, obviously, is once we have learned on how to sell [ reacher ] cars as we proved in the last 2 years, instead of selling white cars with 14-inch wheels to the fleet, which was also the problem, I think we need to be able to stabilize. We have an advantage is that the product novelty -- we will have one of the youngest range in Europe for sure, okay? So normal product novelty pushes mix up, so people tend to buy, so we would take advantage of that to keep the thing in the same fashion we have achieved in the last 2 years. You might argue that we are doing this because we had a few cars, so we produced the higher spec trims. But remember that on the other side, when you have a high-spec thing, you have more semiconductors, more components, et cetera, et cetera. So it was not only this, the explanation. So it's a new policy. It's the policy of value. Remember that dealers are now, let's say, remunerated not on volume but on the margin that they bring and the customer satisfaction. So they are incentivized to sell [ reacher ] cars at Renault, which is good. I mean, it's not particularly original. But in our case, it was not always the focus of the thing. In terms of stock, I do -- I would not consider that the stock is high because we are -- more or less we are at the level we were at the end of 2020, which was not a very easy year with what we saw. So we had much worse than that in the past. In front of that, you have more than 3.5% month, let's say, order bank. So the thing is covered. So you also have to look at this dimension. And it's not on the shoulder of Renault. It's right now more in the dealers waiting for the cars to be delivered to the people that have ordered the car. So we're already seeing in January, the thing going down. Actually, the order bank [indiscernible] also and then going up. So I think it's just a situation that we were forced in because we -- everybody restarted very strong in September because components were there. And then we find out that there were no trucks, no ships, et cetera, et cetera, no ships to deliver the car, and we were always all in the same -- with the same problem. But as Thierry said, we can do a very good fast start in 2023 also because we have the orders, we have the cars. So look at the thing from that perspective. So 2022 is gone. We've done a good result, but this thing is actually helping us to start the year very strongly. I remember that Renault structure has always been better in H2 than in H1. So if you do an H1, a solid H1, it's going to be good for the year.

So apparently Stephen Reitman from Societe Generale is back.

Yes, I hope you can hear me now.

Yes.

Two questions, please. First of all, Germany is an important market for Renault traditionally. Could you comment on what's been happening with your PHEV sales there since the ending of the consumer facing subsidies on PHEVs in the German market from the beginning of this year? And my second question, again, is going back to demand for the EVs. It was already mentioned about the Tesla price cuts. And in France, Tesla is closing February, March delivery on its vehicles, which is obviously very short. What are the wait times like at the moment for Megane Electric, and could you comment on the production rate. We saw that you delivered 8,000 units in December. Can we take that as now, as a potential run rate you might be able to achieve on a monthly basis in 2023? So 72,000 units maybe a year or something like that. I am just getting an idea on that.

I think I tried to answer to each one of them. I don't know if [indiscernible] because there are some specific questions on Renault brand. But I mean, we actually never really pushed very hard on plug-in hybrid, okay? So we have that kind of technology, especially for Kaptur, which actually is also a weird segment to have a plug-in hybrid. Normally, this is a technology that is a bit sophisticated and put on the higher-end cars. So there is no big impact of the change of regulation subsidies for plug-in hybrid in Germany. I think on the other hand, let's say, we have the normal hybrid, the full hybrid is picking up, as you've seen. So you have cars where we have 60%, 70% mix of full hybrid, including the Austral, okay? So that's the technology that we see more ballast. So it doesn't create as a lot of issue, the change of subsidies or regulation for plug-in hybrid. On the BEV, what will be the average delivery for Megane like a couple of months, 2, 3 months or something like this. So we are in that space. I think that we still have a few markets to launch for the Megane. I don't -- you're not going to trap me into volume forecast because I've learned many, many years ago not to deliver because it's a kind of a lose-lose thing. So what we have to do is make sure that the Megane is a profitable car and make sure that the Megane stays on the podium of the most successful, let's say, EVs in Europe in each segment. That's the task. We don't want to destroy value. We want to -- launch was good despite the fact that we had a very, very sophisticated completely new product, I think customer satisfaction is high with all the hicks of a lot of people switching from combustion engine and getting used to electrical car, which is another world. So I think we need to be -- we keep working. And this will not be the only car that we do in electric, also on the same platform. So we are working on it. So this is Ampere. So I think we have 3 or 4 years where we will have to develop this business. Yes, have I answered all?

You can confirm then, confirm that your dealers didn't see major tractions, people switching to canceling orders on the basis of these price cuts from competitors. They -- people stop with their orders.

No. But as I said before, I mean, you can't clap the hands to someone that is suddenly increasing pricing 20% and then after a few months going down. Probably they entered into a loop as they have a lot of production capacity. They enter into the loop of old-school OEMs that have a pressure to fill order banks, but maybe it's an interpretation. You should ask to them, but we don't want to get into this thing. We have -- we want to do a quality ramp-up of our EV business because otherwise, you're going to kill the thing into the egg. And we know, I mean, we actually did it with the combustion cars until a few years ago, kill our business to push. We don't want to do it.

We have just the time for last question. So this is from Henning Cosman Barclays.

Luca, you just said we won't trap you into giving a volume guidance, but I was hoping to just perhaps to reconfirm or clarify a few things that were said earlier. So just on the sales or unit growth for 2023 in the context of you're seeing the European market going up slightly and that very strong lineup of yours, of course. How are we thinking now about volume? I think Thierry said in one of his comments, it would be a tailwind or an upside if volumes were to pick up and its still a constrained situation. So I just wanted to clarify what that means now, are we actually expecting flat volume as a base case. I wasn't quite sure where we sort of agree on here now on the back of the core. And then the second question, Thierry, on the order intake, right? I appreciate your comments that now with 20% order intake down or 30% down versus 2019, you wouldn't go back to 2 months of order backlog. But yet, I think that is your target, ultimately, right? You often talk about the target of 2 months order book and 2 months of inventory. So are you sort of suggesting you're not going to reach that by the end of the year? And of course, in that context it's interesting because you had clearly higher wholesale versus retail this year. Would you expect that to reverse? And then in combination of the 2 questions, if retail was relatively flat, could wholesale volumes be negative in 2023?

Answer because it's too complicated for me.

Okay. I'll try to give a simple answer. What we've put -- underlying the guidance that we gave you for 2023, there's a slight volume increase. Luca mentioned European markets are being flattish, slightly in growth. We've got a decent amount of new product activity. So we think we have an opportunity to gain share. If there's availability of components, at the end, it will boil down to supply chain issues, generally speaking. On the order bank, the 2 -- so the target of 2 months, our ideal sweet spot is going to have 2 months in order bank and 2 months in stock, okay? Right now, we're quite in balance because we've got 3.5 months. We're not going to complain about that from an order intake perspective. So you fill the bucket with the orders that come in and you empty it with the shipments. The problem is the shipments. And as you say -- and components, yes. What I mean by shipments is our ability, our ability to ship because of availability of components. We will probably not reach the 2 months at the end of the year because we have an order book today which says that even with a improvement in availability of components, we still see an order book that's growing, right? So it's hard to complain about it, though, because it's a situation where we've got good visibility going forward. The order book is not only good in terms of quantity, it's good in terms of quality. The trim mix is good. People are opting for electrified vehicles, electrified vehicles with a high trim mix. It helps us on the financing side as well. You saw in the financials despite decrease in registrations, the new financings are up because the FinCo also benefits from the average revenue increase per unit. So for us, in a way, it's going to be about how many components we get, our ability to ship. If the components crisis gets better and volume picks up, it will be good news for us. If it stays as it is, we'll keep working as we've been working it up to now, deliver to the best of our abilities. And still, the profit will be up. Thanks to pricing and productivity. Hopefully, that answers your question.

Thank you, Luca. Thank you, Thierry. This concludes our full year results presentation. Luca, maybe a final word.

Thank you to all of you. Thanks for coming, thanks for connecting. I hope that we were able to clarify all your, let's say, doubts or question, but we'll be there and we'll be around this year and meet a lot of the media and the analysts as we have, I think, learned to do in the last couple of years, and it's always a pleasure. Thank you very much.

Thank you.