• Bolstered by the success of its product range and international sales growth, Renault's revenues rose by 11.6% compared with first-half 2003.
• Operating margin more than doubled compared with first-half 2003, exceeding 6% of revenues. Renault's net income grew by 28.5% to € 1,513 million.
• The Automobile Division's net financial indebtedness was reduced by almost € 1 billion.

Total worldwide sales of passenger cars and light commercial vehicles by the Renault group, including Dacia and Renault Samsung Motors, rose by 6.6% to 1,306,933 vehicles, compared with 1,226,471 in first-half 2003.

In Western Europe, with sales up by 2.4%, Renault confirmed its position as number-one Car + LCV brand, with market share of 10.9%, number-one car brand (10.45%) and number one LCV brand (15.2%). This performance was achieved thanks to the success of its models, particularly the Mégane range (+24.9%), Espace IV (+30.5%) and the three light commercial vehicles, Kangoo, Trafic and Master (+11.7%).

Outside Western Europe, Group sales totaled 329,816 units, up 21.2% compared with first-half 2003. Apart from in Korea, where a difficult economic environment continues to prevail, the Group made strong progress in other regions of the world, particularly in Turkey (+264%), which recorded exceptional growth, and in the Middle East/Africa (+35%). Dacia's sales rose by 34.2%, on the back of the success of Solenza and export growth.

Revenues totaled € 20,761 million, up 11.6% on first-half 2003, on a consistent basis.

The Automobile Division's contribution to revenues rose 11.9% to € 19,708 million, on a consistent basis. In Europe, the trend initiated in second-half 2003 intensified, with a higher volume effect and a sharp increase in the model/price mix effect on new vehicles, mainly due to the success of the Mégane range, rounded out with the 7-seater Scénic in first-half 2004, as well as Espace IV and our light commercial vehicle line-up. Revenues were also boosted by continued international growth.

The Sales Financing Division made a € 1,053 million contribution, up 6.5% on first-half 2003, on a consistent basis.

Operating margin above 6% of revenues

Group operating margin, which has been steadily increasing over the past three half-year periods, reached € 1,275 million, more than double the figure for first-half 2003. It accounted for 6.1% of revenues compared with 3.2% in first-half 2003.

The Automobile Division generated operating margin of € 1,054 million, or 5.3% of revenues, compared with 2.3% in first-half 2003. Europe made a significant contribution, benefiting from the improvement in the model mix across the Mégane II range, Espace IV and the LCV line-up, backed by further reductions in purchasing, warranty and production costs. The contribution of international growth to operating margin rose significantly, with a major share contributed notably by Turkey, which reported exceptionally buoyant growth in first-half 2004.

The Sales Financing Division generated margin of € 221 million, or 21% of its revenues, compared with 19.2% in first-half 2003, confirming its dynamic sales policy and strict cost and risk management.

Other operating income and expenses showed a charge of € 70 million, compared with a € 170 million charge in first-half 2003. This result includes restructuring costs of € 92 million, mainly related to early retirement schemes in France and Spain. It also includes capital gains on the sale of buildings and land.

Operating income totaled € 1,205 million, compared with €418 million in first-half 2003.

The net balance on the financing account, excluding the impact of the cash tender offer for redeemable shares in March 2004, was net income of € 39 million, a € 73 million improvement on first-half 2003. The purchase of 60% of the redeemable shares in circulation had a negative impact of € 343 million on the financing account balance, owing to the difference between the shares' purchase value and their historic value.

Renault's share in the net income of companies accounted for by the equity method increased to € 1,082 million from € 936 million in first-half 2003. Renault benefited from the 9.3% increase in Nissan's contribution to its first-half results which came to €939 million. The equity-accounted contribution of AB Volvo was a positive € 124 million.

As a result, Group pre-tax income totaled € 1,983 million, a 50.2% increase on first-half 2003.

In first-half 2004, current and deferred taxes amounted to a net charge of € 423 million, compared with a net charge of € 129 million in first-half 2003.

After recognizing this tax charge and minority interests, Renault's net income came to € 1,513 million, compared with € 1,177 million in first-half 2003, an increase of 28.5%.

Continuous reinforcement of the balance-sheet structure

At end-June 2004 shareholders' equity amounted to € 14,516 million, a € 925 million increase on December 31, 2003, despite a negative € 231 million impact related to exchange rates. Net financial indebtedness of the Automobile Division was reduced considerably by € 937 million to € 811 million at June 30. Excluding the impact from the purchase of redeemable shares, indebtedness was reduced by € 1,280 million. This reduction was achieved through a net increase in operating income, with cash flow up € 795 million on first-half 2003 to € 2,365 million, and from a decrease in net working capital requirements, partly attributable to a seasonal effect. Strict control over investment at the Automobile Division, combined with a seasonal payment effect, brought investment expense down to 4.2% of revenues, before IAS 38, from 5.3% in first-half 2003. Through the combined effect of a decrease in indebtedness and a rise in shareholders' equity, debt amounted to 5.6% of shareholders' equity at June 30, 2004, a 7.3 point reduction on December 31, 2003.

Outlook for 2004

The second half of 2004, which marks the start of the renewal phase of Renault's entry level range with the launch of Modus, will build on the strength of the excellent results recorded in the first half. For 2004, in a European market up 1 to 2%, Renault is revising its objectives upwards and anticipates a group operating margin of around 5.5% of revenues, based on current exchange rates. This is one percentage point higher than the indication given at the start of the year. The expected increase in net income will progress accordingly.

Renault group consolidated revenues by division and half-year period

€ million	H1 2004	H1 2003 (restated)*	H1 2003 (published)	% change 2004/2003 restated
Automobile	19,708	17,609	17,668	11.9%
Sales Financing	1,053	989	985	6.5%
Total	20,761	18,598	18,653	11.6%

Renault consolidated results by half-year period

€ million	H1 2004	H1 2003
Operating margin	1,275	588
Operating income	1,205	418
Net financial income (expense)	(304)*	(34)
Share in net income of companies accounted for by the equity method	1,082	936
Group pre-tax income	1,983	1,320
Current and deferred taxes	(423)	(129)
Group net income	1,560	1,191
Minority interests	(47)	(14)
Renault net income	1,513	1,177
Earnings per share	€ 5.69	€ 4.43

Operating margin by division and half-year period

€ million	H1 2004	H1 2003	Change %
Automobile Division	1,054	399	+164%
Sales Financing Division	221	189	17%
Total As a % of revenues	1,275 6.1%	588 3.2%	+117%