From the President and CEO For <strong>Renault</strong>, <strong>2005</strong> was a year of transition. On April 29, you entrusted me with the task of carrying on from Louis Schweitzer, to whom I would once again like to pay tribute for his work at the head of the company. Since then, I have rediscovered the company by listening to as many of our staff members as possible at all levels, in all areas of operation and all over the world. This extensive review reinforced my conviction that <strong>Renault</strong> has enormous potential. It provided an opportunity to make an in-depth, lucid diagnosis of our position, drawing on collective contributions. From this diagnosis, we decided the strategy of the company, developed a new product plan and prepared action plans for the future. <strong>2005</strong> was also a year of mixed fortunes for <strong>Renault</strong>, with undeniable successes but also some difficulties in the second half. Successes included highly promising international development, buoyed in particular by Logan, which proved an immediate winner on all its markets. Alongside our partner Nissan, we made concrete progress exemplified by the launches of the Alliance’s first engine, the 2.0 dCi, and the TL4 gearbox. The double Formula 1 World Championship title demonstrated <strong>Renault</strong>’s capacity to react rapidly and join forces to achieve breakthrough performances, as did the acclaim given to New Clio, named Car of the Year 2006. But with competition in Europe fiercer than ever and given the current stage in our product cycle, our European sales fell 7.3% in the second half and our full-year operating profit margin declined. The contributions of Nissan and Volvo nevertheless led <strong>Renault</strong> to post record net income, up 18.7% to set earnings per share at 513.19. <strong>Renault</strong> is not in crisis, but remains fragile. Without a strong response in the right direction to make our performance more robust, our vulnerability could lead to a more dangerous, and therefore unacceptable, situation. The year ahead of us will be decisive. The business environment is difficult and we will be bringing only two new models to market. But it will also be a beginning as we lay the groundwork for future vehicles and deploy our mid-term business plan – <strong>Renault</strong> Commitment 2009. This growth plan aims to make and sustain <strong>Renault</strong> as the most profitable European volume car company. To achieve this ambition, we will take the offensive with a product drive that is unprecedented in the history of <strong>Renault</strong>. Twenty-six new models will be launched during the plan. <strong>Renault</strong> Commitment 2009 means mobilizing all our forces in the service of three commitments – quality, profitability and growth. - Quality is both our first duty to our customers and the first commitment of the plan.The future Laguna will embody this commitment by ranking among the top three cars in its segment for product and service quality. The progress achieved will be applied with the same diligence across the entire range. - Profitability is the second commitment. We will raise our operating profit margin to 6% of revenues through unwavering efforts to contain costs and expand our product offering. <strong>Renault</strong>’s short-, medium- and long-term management will be focused on customers and driven by profit. - Our third commitment is to sell an additional 800,000 units in 2009 as compared to <strong>2005</strong>. Our ambitious growth objective will be achieved by reinforcing the product range and making significant progress in quality and technology. This drive will be supported by technological advances achieved through the synergies generated with Nissan in the Alliance. We are preparing a full range of alternative technologies to reduce fuel consumption and CO2 emissions. We will also continue to innovate in passive safety to consolidate our European leadership in this field. Sustainable development is central to our strategy as well, reflecting our concern for the protection of people and the environment, a core value of the company. The commitments made in this plan are fully transparent, and I will give you regular reports on the progress made. As shareholders, you have a stake in the success of the company, and we are aiming for a linear and significant increase in our dividend to 54.50 in 2009. You can count on the dedication of the men and women in our company who will be putting all their talent and conviction to work to make <strong>Renault</strong> – in the framework of the Alliance – a great company with a sustainable, high performance in the global automotive industry. 4 <strong>2005</strong> <strong>Renault</strong> Annual Report
From the President and CEO Carlos Ghosn <strong>Renault</strong> President and CEO <strong>2005</strong> <strong>Renault</strong> Annual Report 5
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