26 April 2017

FCA: 2017 First Quarter Results

 

FCA reports record first quarter with Adjusted EBIT of €1.5 billion, up 11%, margin increasing to 5.5%; Adjusted Net Profit up 27% to €0.7 billion and Net Profit of €0.6 billion. Full-year guidance is confirmed. 

  • Worldwide combined shipments(1) of 1,145 thousand units, substantially in line with Q1 2016
  • Net revenues of €27.7 billion, up 4%
  • Adjusted EBIT of €1,535 million, up 11% with improvement in all segments except LATAM
  • Adjusted net profit of €671 million, up 27%; Net profit of €641 million, up 34%
  • Net industrial debt of €5.1 billion, limiting the seasonal increase to €0.5 billion from December 2016, compared to an increase of €1.5 billion for Q1 2016
  • Liquidity strong at €21.6 billion, including extended syndicated revolving credit facility at €6.25 billion, up-sized from €5.0 billion
  • Moody's Investors Service improved FCA outlook to positive from stable and affirmed Ba3 corporate credit rating

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(1) Combined shipments include all shipments by the Group's unconsolidated joint ventures, whereas consolidated shipments only include shipments from the Group's consolidated subsidiaries; (2) Refer to page 7 for reconciliations of Net profit to Adjusted EBIT, Net profit to Adjusted net profit and Diluted EPS to Adjusted diluted EPS and page 8 for the reconciliation of Debt to Net industrial debt; (3) Guidance is not provided on the most directly comparable IFRS financial statement line item for Adjusted EBIT and Adjusted net profit as the income or expense excluded from these non-GAAP financial measures in accordance with our policy are, by definition, not predictable and uncertain. 

 

Improved margin despite lower shipments 

  • U.S. market share(4) of 12.5%, down 90 bps driven by discontinuation of the Dodge Dart and Chrysler 200 and the transition to the all-new Jeep Compass, as well as reduced fleet volumes
  • Decrease in shipments primarily due to lower fleet volumes and ramp up of all-new Jeep Compass
  • Net revenues flat; positive vehicle and market mix, as well as positive foreign exchange translation, substantially offset by lower shipments
  • Adjusted EBIT slightly improved mainly due to purchasing savings, lower warranty costs and favorable foreign currency translation effects, partially offset by higher product costs for content enhancements and unfavorable net price

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(4) Our estimated market share data presented are based on management's estimates of industry sales data, which use certain data provided by third-party sources, including IHS Markit and Ward's Automotive. 

 

Maintained market share(6) leadership in Brazil with 17.8% market share 

  • Shipments flat despite continued market weakness in Brazil
  • Net revenues increase primarily due to favorable vehicle mix, positive net pricing mainly in Brazil and favorable foreign exchange translation effects
  • Adjusted EBIT decrease mainly as a result of higher product costs driven by inflation, higher depreciation and amortization related to new vehicles and negative foreign exchange effects, partially offset by increase in Net revenues and lower advertising costs
  • Adjusted EBIT excludes total charges of €32 million related to workforce restructuring costs

 

Combined shipments up 25% 

  • Continued transition to localized Jeep production through JV in China driving higher combined shipments and lower consolidated shipments
  • Net revenues decrease primarily as a result of lower consolidated shipments
  • Adjusted EBIT increase mainly due to improved results from JV in China, partially offset by lower Net revenues

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(5) Number is not meaningful; (6) Our estimated market share data presented are based on management's estimates of industry sales data, which use certain data provided by third-party sources, including IHS Markit, National Organization of Automotive Vehicles Distribution and Association of Automotive Producers. 


 

Adjusted EBIT nearly doubled with margin up 130 bps 

  • European market share (EU28+EFTA) for passenger cars up 30 bps to 7.0% (up 50 bps to 29.6% in Italy) and down 10 bps to 10.8% for light commercial vehicles (LCVs)(7) (41.0% in Italy, down from 44.7%)
  • Increase in shipments primarily driven by Fiat Tipo family, all-new Alfa Romeo Giulia and Stelvio and Fiat Professional Talento
  • Net revenues increase due to higher volumes and favorable vehicle mix mainly driven by all-new Alfa Romeo Giulia and Stelvio
  • Adjusted EBIT increase primarily from higher Net revenues, as well as purchasing and manufacturing efficiencies, partially offset by increase in advertising costs, research and development costs and depreciation related to new vehicles

 

Third consecutive quarter of double- digit margin 

  • Shipments nearly doubled driven by all-new Levante; increases in all regions: Europe (+109%), China (+98%) and North America (+77%)
  • Net revenues increase due to higher shipments and favorable vehicle and market mix
  • Adjusted EBIT increase primarily due to increase in Net revenues, partially offset by higher depreciation and amortization related to all-new Levante

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(7) Due to unavailability of market data for Italy, the figures reported are an extrapolation and discrepancies with actual data could exist 


 

Improved performance from all businesses with margin up 100 bps 

  • Net revenues increase driven by higher volumes at Magneti Marelli, Comau and Teksid Adjusted
  • djusted EBIT increase mainly from higher Net revenues and lower industrial costs Magneti Marelli non-captive
  • Net revenues at 66% and Comau at 70%

 

Reconciliations

 

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(8) Adjusted EBIT excludes certain adjustments from Net profit including: gains/(losses) on the disposal of investments, restructuring, impairments, asset write-offs and unusual income/(expenses) that are considered rare or discrete events that are infrequent in nature, and also excludes Net financial expenses and Tax expense/(benefit); (9) Adjusted net profit is calculated as Net profit/(loss) excluding post-tax impacts of the same items excluded from Adjusted EBIT as well as financial income/(expenses) and tax income/(expenses) considered rare or discrete events that are infrequent in nature; (10) Adjusted diluted EPS is calculated by adjusting Diluted EPS for the impact of the same items excluded from Adjusted EBIT, as well as financial income/(expenses) and tax income/(expenses) considered rare or discrete events that are infrequent in nature. 

 

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(11) Net industrial debt is computed as: Debt plus derivative financial liabilities related to industrial activities less (i) cash and cash equivalents, (ii) current available-for-sale and held-for trading securities, (iii) current financial receivables from Group or jointly controlled financial services entities and (iv) derivative financial assets and collateral deposits; therefore, debt, cash and cash equivalents and other financial assets/liabilities pertaining to financial services entities are excluded from the computation of Net industrial debt. 

 

This document, and in particular the section entitled "2017 Guidance", contains forward-looking statements. These statements may include terms such as "may", "will", "expect", "could", "should", "intend", "estimate", "anticipate", "believe", "remain", "on track", "design", "target", "objective", "goal", "forecast", "projection", "outlook", "prospects", "plan", or similar terms. Forward-looking statements are not guarantees of future performance. Rather, they are based on the Group's current expectations and projections about future events and, by their nature, are subject to inherent risks and uncertainties. They relate to events and depend on circumstances that may or may not occur or exist in the future and, as such, undue reliance should not be placed on them. Actual results may differ materially from those expressed in such statements as a result of a variety of factors, including: the Group's ability to maintain vehicle shipment volumes; changes in the global financial markets, general economic environment and changes in demand for automotive products, which is subject to cyclicality; changes in local economic and political conditions, including with regard to trade policy; the Group's ability to expand certain of the Group's brands internationally; various types of claims, lawsuits, governmental investigations and other contingent obligations against the Group, including product liability and warranty claims and environmental claims, governmental investigations and lawsuits; material operating expenditures in relation to compliance with environmental, health and safety regulations; the Group's ability to enrich its product portfolio and offer innovative products; the high level of competition in the automotive industry, which may increase due to consolidation; exposure to shortfalls in the Group's defined benefit pension plans; the Group's ability to provide or arrange for adequate access to financing for the Group's dealers and retail customers and risks associated with financial services companies; the Group's ability to access funding to execute the Group's business plan and improve the Group's business, financial condition and results of operations; changes in the Group's credit ratings; the Group's ability to realize anticipated benefits from any joint venture arrangements and other strategic alliances; disruptions arising from political, social and economic instability; risks associated with our relationships with employees, dealers and suppliers; increases in costs, disruptions of supply or shortages of raw materials; developments in labor and industrial relations and developments in applicable labor laws; exchange rate fluctuations, interest rate changes, credit risk and other market risks; political and civil unrest; earthquakes or other disasters and other risks and uncertainties.


Any forward-looking statements contained in this document speak only as of the date of this document and the Company does not undertake any obligation to update or revise publicly forward-looking statements. Further information concerning the Group and its businesses, including factors that could materially affect the Company's financial results, is included in the Company's reports and filings with the U.S. Securities and Exchange Commission, the AFM and CONSOB.


On April 26, 2017, at 3p.m. BST, management will hold a conference call to present the 2017 first quarter results to financial analysts and institutional investors. The call can be followed live and a recording will be available later on the Group website (http://www.fcagroup.com/en-us/pages/home.aspx). The supporting document will be made available on the Group website prior to the call.

 

London, April 26, 2017 

 

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