RENAULT ANNUAL REPORT 13-15, quai Le Gallo / Blanchard Printing 92513 BOULOGNE-BILLANCOURT Cedex France DREAM ON Tel.: + 33 (0)1 41 04 50 50 www.renault.com design: 2002 2002 ANNUAL REPORT INVESTOR RELATIONS DEPARTMENT CORPORATE COMMUNICATIONS DEPARTMENT Photo credits: Anthony Bernier: front and back cover, pp. 4, 108, 109 Patrick Curtet: p. 27 Dingo: pp. 191, 196 Dominique Dumas: p. 41 Georges Fessy: p. 110 Harry Gruyaert: p. 28 D. Katz: p. 77 Chris Overton: p. 135 Luc Pérénom: pp. 21, 31, 74 Photothèque Euro NCAP: p. 101 Photothèque RSM: pp. 10, 69 Renault Communication DR: pp. 6, 102, 103, 104, 192 Patrick Sautelet: pp. 9, 11, 147, 182 Studio Pons: pp. 30, 63, 65, 86, 95 Michel de Vries: pp. 26, 32, 60, 97 Alexander Walter / Getty Images: front cover Annual Report 2002 Contents RENAULT GROUP CORPORATE 1. STRATEGY 4 2. GOVERNANCE 32 1.1. Presentation of Renault and the group 6 2.1. Renault and its shareholders 34 1.1.1. Background and highlights 6 2.1.1. Legal information about Renault 34 1.1.2. Main activities 7 2.1.2. General information 1.1.2.1. Automobile Division 7 about Renault’s share capital 35 1.1.2.2. Sales Financing Division 13` 2.1.3. Ownership of share 1.1.2.3. Strategic shareholdings 14 capital and voting rights 36 2.1.4. Market in Renault shares 38 1.2. The Renault-Nissan Alliance 15 2.1.5. Dividends 40 1.2.1. Aims and governance 15 2.1.6. Disclosure policy 40 1.2.1.1. The phases and aims of the Alliance 15 1.2.1.2. Powers of Renault-Nissan b.v. 17 2.2. Management and administration 42 1.2.2. Areas of Renault-Nissan Cooperation 19 2.2.1. Composition and operating 1.2.2.1. Sharing resources to generate economies of scale 19 procedures of management 1.2.2.2. Complementary strengths spur development 20 and supervisory bodies 42 1.2.3. Results 21 2.2.1.1. Composition and operating procedures of the Board of Directors 42 1.2.3.1. Nissan’s recovery proved faster and fuller than expected 21 2.2.1.2. Directors’ fees 47 1.2.3.2. Nissan makes a growing 2.2.1.3. Composition and operating contribution to Renault’s results 22 procedures of management bodie 48 1.2.3.3. Global industrial and commercial presence 23 2.2.1.4. Audits 49 1.2.3.4. Quantified data on joint operations 25 2.2.2. Interest of senior executives 49 2.2.2.1. Remuneration of senior executives 1.3. The profitable growth strategy 26 and corporate officers 49 2.2.2.2. Stock options granted to senior executives 1.3.1. Goal 1: Build recognition for our brand identity 26 and corporate officers 50 1.3.2. Goal 2: Be the most competitive 2.2.3. Risk management 52 manufacturer on our markets in terms of quality, costs and delivery times 27 2.2.3.1. Organization of risk management 52 2.2.3.2. Market risk 52 1.3.3. Goal 3: Extend our international reach 28 2.2.3.3. Operating risk 56 1.3.4. Goal 4: Develop Renault’s core values 29 2.2.3.4. Legal risk 58 1.3.5. Goal 5: Translate success into 2.2.3.5. Other risks 58 financial performance 31 The ∞ symbol identifies information in the text corresponding to information required by the implementing decree of Article 116 of the New Economic Regulations (NRE) Act in France. The Ω symbol indicates information relating to the guidelines of the Global Reporting Initiative (GRI) on sustainable development reports. See page 188 for a cross-index of GRI indicators. The ¥symbol means that more information is available from Renault’s sustainable development website, at the following address: http://www.sustainability.renault.com. 2 Renault 2002 Annual report RENAULT’S PERFORMANCE CONSOLIDATED FINANCIAL 3. IN 2002 60 5. STATEMENTS 110 3.1. Economic performance 62 5.1. Auditors’ report on the consolidated 3.1.1. Sales results 62 financial statements 112 3.1.1.1. Automobile Division 62 3.1.1.2. Sales Financing Division 69 5.2. Consolidated financial statements 3.1.2. Financial results in 2002 70 and notes 113 3.2. Employee relations performance 78 3.2.1. Workforce 78 3.2.2. Human Resources policy 79 6. MAIN SUBSIDIARIES 162 3.2.2.1. Forward-thinking 79 3.2.2.2. Attracting and motivating employees 81 3.2.2.3. Promoting involvement 84 DRAFT RESOLUTIONS 166 3.3. Environmental performance 86 7. 3.3.1. The challenges 87 3.3.2. Life-cycle environmental management 88 8. RECENT EVENTS 176 3.3.3. Protecting the environment 8.1. Renault invests in Russia 177 and remaining competitive 91 8.2. Production of Avantime halted 177 3.3.4. Reducing the environmental impact of activities 91 3.3.5. Maintaining the value of our assets 95 SUPPLEMENTAL 3.3.6. Organizing communications 97 INFORMATION 178 3.4. Social performance 98 Internal regulations of the board of directors 180 3.4.1. Code of Good Conduct 98 Environmental data 184 3.4.2. Renault and its stakeholders 98 GRI indicators: cross reference table 188 3.4.3. Renault and Mobility 99 3.4.4. Renault and road safety 101 3.4.5. Contribution to civil society 103 3.5. Research and Development policy 106 4. OUTLOOK 108 Renault 3 2002 Annual report 1 Renault Group Strategy Mégane II was voted Car of the Year 2003 by a panel of 58 motoring journalists from 22 European countries. 4 Renault 2002 Annual Report 1.1. Presentation of Renault and the group 6 1.2.2. Areas of Renault-Nissan cooperation 19 1.2.2.1. Sharing resources to generate 1.1.1. Background and highlights 6 economies of scale 19 1.1.2. Main activities 7 Common platforms 19 1.1.2.1. Automobile Division 7 Common powertrains 19 Renault group ranges 7 Joint purchasing policy 19 Main manufacturing sites 10 A common European distribution policy 19 Partnerships and collaborative projects 11 Shared production capacity and cross-badging 19 The Renault distribution network 11 A joint IS/IT organization 20 Cash management 12 1.2.2.2. Complementary strengths spur development 20 1.1.2.2. Sales Financing Division 13 Rounding out the offer locally 20 Consumer market 13 Sharing know-how and skills 20 Corporate clients 13 1.2.3. Results 21 Networks 13 1.2.3.1. Nissan’s recovery proved faster 1.1.2.3. Strategic shareholdings 14 and fuller than expected 21 Renault’s shareholding in AB Volvo 14 The Nissan Revival Plan 21 Renault’s shareholding in Nissan 14 The Nissan 180 plan targets lasting growth 21 1.2.3.2. Nissan makes a growing 1.2. The Renault-Nissan Alliance 15 contribution to Renault’s results 22 1.2.3.3. Global industrial 1.2.1. Aims and governance 15 and commercial presence 23 1.2.1.1. The phases and aims of the Alliance 15 1.2.3.4. Quantified data on joint operations 25 1999: the first phase of the Alliance 15 The second phase started in 2002 16 1.3. The profitable growth strategy 26 The Alliance Board 17 1.2.1.2. Powers of Renault-Nissan b.v. 17 1.3.1. Goal 1: Build recognition for our brand identity 26 1.3.2. Goal 2: Be the most competitive manufacturer on our markets in terms of quality, costs and delivery times 27 1.3.3. Goal 3: Extend our international reach 28 1.3.4. Goal 4: Develop Renault’s core values 29 1.3.5. Goal 5: Translate success into financial performance 31 Renault 5 2002 Annual Report 1. Renault Group Strategy 2. Corporate Governance 3. Renault’s Performance in 2002 4. Outlook for 2003 1.1. Presentation of Renault and the group 1.1.1. BACKGROUND AND HIGHLIGHTS In 2001, Renault became the main shareholder in the Volvo group, with a 20% stake, and the two companies joined forces to form the world’s sec- ond-biggest truck manufacturer. Société Renault Frères was formed in 1898 to manufacture motor vehi- In 2002, Renault and Nissan implemented the second stage of their cles, taking advantage of patents such as the first direct-drive transmission. Alliance, aimed at strengthening their equity ties and creating a joint strate- Based in the Paris suburb of Billancourt, the company achieved international gic command structure. The plan was endorsed by an Extraordinary General renown through its success in motor sports, and initially specialized in the Meeting of Renault Shareholders on March 28, 2002. Renault raised its construction of passenger cars and taxis. During the First World War, it pro- stake in Nissan from 36.8% to 44.4%. At the same time Nissan took a 15% duced substantial volumes of trucks, light tanks and aircraft engines. ownership interest in Renault through Nissan Finance Co., Ltd. To underpin the move to strengthen the Alliance, the French government reduced its hold- In 1922, having expanded strongly in the passenger car and commercial ing in Renault to 25.9%. vehicle markets, Renault became a limited company. Establishing numer- ous production centers in France and abroad, Renault gradually emerged as Renault also sold its holding in Irisbus to Iveco. Irisbus will keep the right the French automobile market leader. to use the Renault brand name for its vehicles until June 2005. In terms of new products, 2002 saw the launch of Mégane II (Hatch and Sport Hatch In January 1945, the company was nationalized and renamed “Régie versions), Vel Satis and Espace IV.