Renault CFO on driving innovation at auto giant

At Renault the moment is described as the “November 19 incident”. On that date last year Carlos Ghosn, the charismatic leader of the French vehicle maker, along with other companies in the Renault-Nissan-Mitsubishi alliance, was arrested.

When it happened Clotilde Delbos- two years into the CFO role- was meeting shareholders on a roadshow in New York. Having been told the news at 5am she was thrust into the spotlight three hours later, fielding investors’ questions on the issue. “It is certainly a crisis when your CEO is put in jail,” she says.

Shareholders were desperate to know what had happened, after all Ghosn had become as a key architect of the Alliance- the world’s biggest car maker- the industry’s greatest name.

Having held key positions at the top of Renault, Nissan and Mitsubishi, meant that their futures as separate entities and as part of the Alliance were suddenly under intense scrutiny.

Delbos was advised by her team to explain the situation as best she could. “It’s what you have to do. It’s your job,” she says.

The legal situation regarding Ghosn continues to change. After being arrested for alleged financial crimes against Nissan he has been held in custody in Japan. In that time he has been gradually stripped of titles and board positions of all the companies in the Alliance.

He was granted bail in March but at the time of writing the former head has been arrested a fourth time on suspicion of aggravated breach of trust relating to his time at Nissan. At one point Ghosn then featured in an online video protesting his innocence.

In the first week of April Renault accused him of “questionable practices”. He has called the charges “groundless.”

After the initial shock an urgent requirement was to install as interim chairman Philippe Lagayette, who was senior independent director and as interim CEO Thierry Bolloré, who was chief operating officer. “In my view we managed pretty well in the crisis, as we had very good governance in place,” says Delbos.

Since January a new governance structure has been in place with Jean-Dominique Senard acting as Chairman of the Board and Thierry Bolloré becoming full-time CEO.

She says that “apart from one or two days” operations continued at a high degree of focus. “People talk about what they see on the news, but they keep on producing, they keep on selling, they keep on taking care of the business and nobody asks ‘what are we going to do?’

“I think the results we delivered in 2018 are really proof that everything kept on going, every decision kept on going,” says Delbos.

Renault’s  2018 revenue was €57.4bn, down 2.3% on the previous year while group operating income stood at €2.9bn compared to €3.8bn in 2017. The company says this fall was mainly due to the Argentinean crisis impact and provisions relating to an early retirement program in France.

“The fact that Thierry Bolloré knew by heart everything that was happening in the company, as he was already a COO, meant there was no reason to change anything, no reason to stop any decision,” she adds.

A big leap

Delbos says that taking on the investor relations side of being a CFO of a large listed company, in Renault a jewel in the French crown with 15% being owned by the state, was a huge step up. “You are the voice of the company and that puts a lot of responsibility on your shoulders, because you know what you say might have an impact on the share price,” she says.

Her route to Renault came by way of various industrial groups. After business school in Lyon where she studied accounting, Delbos headed to California to work for a subsidiary of French industrial alternators group Leroy-Somer that was subsumed by Emerson Electric.

“I was too afraid that if I started working in France, I would work all my life in France, so that’s how I ended getting a job with a Californian company,” she says. After a couple of years, she worked for PwC but moved to aluminium group Pechiney to be in something more international. Bought by Alcan in 2003, that was acquired by Rio Tinto in 2007, Delbos continued in Alcan Engineered Products that was acquired by private equity firm Apollo Global Management 2011.

New ownership offered experience of a different business culture. “What is most interesting about private equity is the speed at which decisions can be made, based on quite detailed information, and extremely regular contact-almost daily between the shareholder and management.

“We had to put in place quite a lot of reporting systems and developed a very different way of looking at financial information that I would say a traditional owner would do,” she says.

Rise to the top

The opportunity came to implement some of the dynamic elements learned in a private equity and other ‘Anglo-Saxon’ company roles when Delbos was offered the role of controller at Renault, a return to her roots in heavy industry.

Delbos says in Renault she was also attracted to the long-term approach of a corporate, that requires certain values attuned to long term goals and strategy “and working on a vision of something”. It also meant working in a group that was part of a global alliance, that had been getting closer in recent years, which appealed to Delbos’ internationalist perspective.

The influence of the Alliance was felt after a couple of years when she was asked to undertake a second role aligning KPIs between the companies within the Alliance. “It was extremely difficult because you can’t impose anything and the culture of the two companies are very different, but we made a lot of progress,” she says.

A lot of progress was made through applying various soft skills. “I had to go there and act in a humble way, showing willingness to talk, putting my foot in the door in a gentle way, in order to start having them accept the discussions,” she reveals.

In April 2016 Delbos was made group CFO of Renault. Since then various additional responsibilities have been added including chairman of the board of the bank RCI, treasury, tax, M&A, financial control and IR.

An immediate priority was to finesse the finance function that had been operating in silos, by improving systems and processes, in a transformation plan entitled Engage.

“We wanted to be the best business partner to the functions, to help create value and be an attractive excellence centre, by bringing skills to the right level,” she says.

Business partnering needed to be improved by better reporting systems “in order to provide more accurate and timely information to enable a comprehensive view of any decision being made,” says Delbos.

That also meant having the right data and enough time to analyse it and present insights, using tools developed in-house through a subsidiary called Renault Digital. “If you build and provide just in time information, you don’t have time to digest it and you don’t propose action. What I want the team to do is propose actions,” she says.

Delbos says there are four ways Renault is seeking to measure the performance of finance: one is measuring the value of each decision, tools implemented.

Another is the costing organisation for the Alliance, that uses digital tools created with Nissan for undertaking very detailed costing of every single part of a car. “By doing so you provide how much it should cost if it is produced using a particular process in such a country, so purchasing teams have the right value in terms of negotiating”.

The performance of the captive finance company RCI Bank & Services, which is a key asset for the group and for the Alliance plays a part, as does the finance organisation in areas such as shared services – to determine the right operating model of finance.

As well as the costing organisation, Renault’s finance team co-operates with Nissan in two other areas. “We have common customs teams and the bank also works with Nissan, because everything we develop for RCI can be used by Nissan in the countries where it operates,” she says.

Strategically aware

Although Delbos works in Renault, she needs to be aware of how the Alliance affects Renault. “Any time there is a decision made by the Alliance that has an impact on Renault I give my opinion.

“Below the Alliance are separate legal entities with different shareholding patterns and minority shareholders. My role is to make sure any decision that is being made is not to the detriment of minority shareholders. My counterpart does the same for Nissan.

“Any decision being made by the Alliance has to be win-win. It cannot be to the detriment to the others. The role of finance is to make sure we are in line with this principle,” she says.

When it comes to the strategic approach of Renault, Delbos says a combined effort between finance and strategy results in simulations. “The role of finance is to make sure we have the right information in terms of simulation, in order to measure what could be the impact, and means having countermeasures prepared in case this happens.

“The role of finance is central as we own the numbers. We are the only function able to make a consolidation of the risks and opportunities and different scenarios,” says Delbos.

She says management can be made aware of potential impacts that could then change or prompt to change some decision in order to offset negative impacts. “We have to bring in what we call ‘risks and opportunities’, so that we can ensure that first everybody knows the impact of various simulation scenarios- and influence the other decisions in terms of spending in order to protect the company.

“If it’s a short term issue its finance, if it becomes long term the strategy team defines the scenarios, and then it’s the operations and finance that liaise together to provide the simulation. If you’re talking about Brexit we have been following that, over two years, with different simulations,” she says.

In the case of the Nissan plant in Sunderland, for which any decisions regarding its future are closely linked to whatever Brexit outcome we end up with, the strategic thinking is both at alliance and legal entity level. “if you take the example of Sunderland, we have an Alliance industrial strategy team who provide scenarios and help us make the decision, but those decisions are linked to the various legal entities,” she says.

Transformation process

Under Delbos and her peers, Renault is preparing for an ever more competitive world. Although the move into new technologies such as autonomous vehicles is not a top priority,  “the Alliance is talking with potential partners but nothing has been contracted”, deals with Microsoft for the Cloud and Google for infotainment, have been agreed.

The group’s governance structure is evolving to meet the expectations of a global investor base, which the separation of chairman and CEO is part of. “All French companies want to have foreign investors, especially American investors, so you’re exposed to what investors want regarding clear governance and more transparent information,” she says.

“If an organisation is well organised, with competent people at the top, and the governance it can be extremely resilient, even in a crisis we had,” says Delbos.

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