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On 2007
sales of nearly €59 billion (12.9% higher than 2006),
Fiat Group posted a trading profit of €3.2 billion, the
highest reported amount in its history, well ahead of
previous guidance and nearly 66% higher than the prior
year, with all major sectors contributing to the
improvement.
Trading margin
rose accordingly to 5.5% from 3.8%, with Automobiles more
than doubling trading profit to €1.1 billion, CNH at €1
billion (+46.7% in dollar terms) and Iveco at € 0.8 billion
(+48.9%). Net income of €2.1 billion was up 78.5% on 2006,
and is the basis on which the Board is recommending a €522
million aggregate dividend payout across all share classes.
Fiat Group
extinguished its net industrial debt in 2007, and closed the
year with €0.4 billion net cash. The share buy back program
will be continued in 2008. All Group 2008 targets are
confirmed, with sales and cash on hand revised upwards.
The Board of
Directors of Fiat S.p.A. met today in Turin under the
chairmanship of Luca Cordero di Montezemolo to approve the
consolidated results of the Group for the fourth quarter and
full year 2007.
- Group
full-year revenues rose 12.9% to €58.5 billion, mainly
driven by: Success of new models enabled Fiat Group
Automobiles to sell 2.234 million units, its highest level
since 2000, and to generate revenues of €26.8 billion, up
13.1%; Agricultural and Construction Equipment (CNH)
revenues were up 12.5% (up 22.8% in US dollar terms) on
improved Agriculture Equipment sales, better mix, prices and
new models; The truck business (Iveco) sold 211,700 units
(up 16.6%), the highest level in its history, with revenues
rising accordingly 22.5% to €11.2 billion. The business had
a solid performance in Western Europe and experienced
buoyant conditions in Eastern Europe (+58%) and Latin
America (+45%).
- At €3,233 million or 5.5% of sales (3.8% in 2006),
full-year trading profit was €1.3 billion higher than in
2006, an increase of 65.7%, driven by significant
improvements in all businesses: Trading profit at Fiat Group
Automobiles nearly tripled to €803 million (up €512 million
over 2006), yielding a return on sales of 3.0% from 1.2% in
2006. The other automobiles businesses (Maserati and
Ferrari) contributed an additional € 290 million, bringing
full year results to €1.1 billion or 3.8% of sales; CNH’s
trading profit rose 34.3% (46.7% in US dollar terms) to €990
million, yielding a trading margin of 8.4% (7.0% in 2006)
due to higher volumes and a more favourable product mix;
Iveco’s trading profit rose nearly 50% to €813 million (7.3%
of revenues, 6.0% in 2006) driven by higher volumes and
better pricing resulting from the competitive repositioning
of the product offering, especially at the heavy end of the
range.
- Net income came in at €2,054 million. Excluding unusual
items, net income was €2,135 million, more than double 2006
reported earnings.
- In 2007 net industrial debt was extinguished on the back
of strong cash flow generation from the businesses and
notwithstanding more than €400 million in share buybacks.
The Group had net cash on hand of €0.4 billion at year-end,
and liquidity remained strong at €6.9 billion.
- All 2008 profits and earnings targets are confirmed, with
the top line expected to exceed €60 billion.
- The Group intends to continue its share buy back program,
and ask the shareholders at the Annual General Meeting for
renewal of the related authority.
The Group
In 2007, Fiat Group had revenues of €58.5 billion, up 12.9%
from 2006, driven by increased activity across all major
industrial businesses. The Automobiles businesses posted
revenues of €29.0 billion, up 13.4% over 2006, on the back
of higher sales volumes at Fiat Group Automobiles, whose
revenues rose 13.1% to €26.8 billion. Significant
contributions also came from Ferrari, whose revenues
increased 15.3%, and Maserati, which recorded revenue growth
of 33.7%. Iveco had revenues of €11.2 billion, up 22.5% due
to outstanding sales volume and improved pricing.
CNH-Case New Holland closed 2007 with revenues of €11.8
billion, up 12.5% from 2006 (up 22.8% in US dollar terms)
due to higher volume, improved product mix and prices, as
well as an extended product offering. Revenues in the
Components and Production Systems businesses totalled €13.4
billion, an overall increase of 8.2%. Sales increased 15.1%
at FPT Powertrain Technologies and 12.2% at Magneti Marelli.
Teksid revenues decreased by 20.0% in absolute terms, mainly
due to changes in the scope of consolidation (revenues were
down 3.4% on a comparable basis). Comau reported a decline
of 14.9%, in line with the reshaping of the business
initiated in 2006.
In Q4 2007, Fiat Group revenues totalled €15.8 billion, a
14.1% increase over Q4 2006, with all major sectors
contributing to the improvement. In 2007, trading profit
totalled €3,233 million (5.5% of revenues), an increase of
65.7% compared to the €1,951 million reported in 2006 (3.8%
of revenues). The Automobiles businesses achieved trading
profit of €1,093 million (up €652 million), more than double
compared to 2006. Fiat Group Automobiles, in particular, had
a trading profit of €803 million, an increase of €512
million compared to 2006, while trading margin grew from
1.2% in 2006 to 3.0% in 2007. Ferrari’s trading profit
totalled €266 million, an increase of 45.4%. For the first
time since its acquisition by Fiat in 1993, Maserati was
profitable in 2007, achieving a trading profit of €24
million against a loss of €33 million in 2006.
Agricultural and
Construction Equipment had a trading profit of €990 million,
exceeding by €253 million (34.3% higher in reported terms
and 46.7% in US dollar terms) the 2006 level; trading margin
grew from 7.0% in 2006 to 8.4% in 2007. Iveco’s trading
profit also improved sharply from €546 million (6.0% of
revenues) in 2006 to €813 million (7.3% of revenues) in
2007, an increase of €267 million or 48.9%. In 2007, the
Components and Production Systems business posted trading
profit of €509 million, representing a trading margin of
3.8% (2.8% in 2006). The €161 million overall improvement
reflects higher trading profit at FPT Powertrain
Technologies and Magneti Marelli, and a much reduced loss at
Comau, whose reshaping plan is starting to bear fruit.
Teksid’s trading profit, down €9 million, improved by €16
million on a comparable scope of operations.
In Q4 2007
trading profit was €947 million, up €405 million or 74.7%
over Q4 2006, with improvements across all businesses.
Operating income for the year totalled €3,152 million. The
€1,091 million improvement from 2006 reflects higher trading
profit for €1,282 million, reduced by the difference of €191
million in unusual items year-over-year (2007: net unusual
loss of €81 million; 2006: net unusual income of €110
million). In 2007, gains on disposals of €190 million (of
which €118 from the sale of the interest held in Mediobanca)
were more than offset by restructuring costs of €105 million
(Fiat Group Automobiles, CNH and Comau) and other one-off
expenses of €166 million mainly related to the remaining
class of strategic suppliers in need of rationalization.
In 2007, net
financial expenses totalled €564 million (€576 million in
2006) and included the positive impact of €70 million (€71
million in 2006) from two stock option-related equity swaps,
the financing costs for pension plans and other employee
benefits for €155 million (€166 million in 2006), as well as
the one-off cost of €43 million related to the accelerated
redemption of CNH senior notes due 2011.
Investment
income totalled €185 million in 2007, versus €156 million in
2006. Income before taxes amounted to €2,773 million in
2007, against €1,641 million in 2006. The improvement of
€1,132 million is due to the €1,091 million increase in
operating income, lower net financial expenses of €12
million and the increase of €29 million in investment
income. Income taxes totalled €719 million, representing an
effective tax rate of 25.9%, (29.9% in 2006), at the low end
of the expected income tax rate range. In 2007, net income
before minority interest was €2,054 million, compared with
income of €1,151 million in 2006.
Net industrial
debt turned from €1,773 million at the end of 2006 to a net
industrial cash position of €355 million at 2007 year end,
reflecting strong net industrial cash flow (change in net
industrial debt, excluding capital increases, dividends, and
the impact of foreign currency translation) of approximately
€2.7 billion, mainly as a result of positive operating
performance, partially offset by dividend distribution of
€0.3 billion and share repurchase for €0.4 billion. In 2007,
capital expenditures of Fiat Group’s industrial operations
amounted to €3.7 billion (including capitalized development
costs), an increase of €0.8 billion against the prior year.
The Group’s cash position at December 31, 2007 was €6.9
billion (€8 billion at the end of 2006). The decrease
follows the net reduction in external debt of about €2.2
billion.
Dividends
On the basis of the Group’s 2007 consolidated results and in
line with the announced dividend policy of distributing
approximately 25% of Group consolidated net income, the
Board of Directors, on the basis of expected income
available for distribution of Fiat S.p.A. and pending formal
approval of the Group’s 2007 annual accounts on February
15th 2008, intends to propose to the shareholders at the
Annual Stockholders Meeting an aggregate dividend payout of
€522 million (€509 million excluding the treasury shares
currently owned by the Group).
The dividend
distribution will be proposed as follows:
• €0.40 per ordinary share, representing a total
distribution of €437 million
(€424 million excluding the treasury shares currently
owned);
• €0.40 per preference share, representing a total
distribution of €41 million;
• €0.555 per savings share, representing a total
distribution of €44 million.
Automobiles
In 2007 the Automobiles businesses achieved revenues of
€29.0 billion, up 13.4% over 2006. In particular, Fiat Group
Automobiles had revenues of €26.8 billion, an increase of
13.1%. On a comparable scope of operations, excluding the
impact of Financial Services activities transferred to the
Fiat Group Automobiles Financial Services joint venture at
the end of 2006, Sector revenues increased by 15.0%.
2007 saw the launch of models that were key to the expansion
of the Fiat Group Automobiles product range and contributed
to the increase in sales volumes, notwithstanding the
flattening of the Western European automobile market
compared to the previous year. These launches included the
Fiat Bravo (120,000 orders from the network, 60% of which
outside Italy), the Fiat 500, the icon of the new Fiat (over
140,000 orders received), the New Croma, the Fiat Linea and
Grande Punto Abarth, the first street model of the revived
Scorpion brand. Lancia introduced the New Musa and the Sport
Momo Design version of the Ypsilon. Alfa Romeo launched the
diesel version of the Alfa Spider and the Alfa 147 Ducati.
New light commercial vehicles launched by Fiat Professional
included the Panorama version of the Scudo, the new Fiorino
Cargo and the Ducato Minibus Elegant. Numerous international
awards were bestowed upon Fiat Group Automobiles models in
2007. The Fiat 500 was named “Car of the Year 2008”, making
Fiat the only automaker to have won this award twice with an
A-Segment car (the Panda was the recipient of this award in
2004). In addition to the “Car of the Year” recognition, the
Fiat 500 was also named “Auto Europa 2008” and “EuroCarBody
2007”. For its part, the Grande Punto, which has just been
launched in South America, was voted “Carro do Aňo 2008” in
Brazil and “Auto Interamericana del Aňo 2008” by the
Interamerican Federation of Automobile Journalists. Finally,
the Fiat Linea was elected “Auto Best 2008”. An equally
prestigious recognition was won by Fiat Professional with
the Scudo, which was named “Van of the Year”.
Fiat Group Automobiles delivered a total of 2,233,800
automobiles and light commercial vehicles, up 12.8%
(approximately 250,000 units) from 2006. Fiat Group
Automobiles deliveries in Western Europe increased by 5.2%
to 1,357,000 units. Volumes rose sharply in all major
European countries: +5.7% in Italy, +14.1% in Spain, +7.6%
in France, +2.1% in Great Britain. The only exception was
Germany where, notwithstanding a particularly sluggish
market, the drop in volume was modest (-2.5%).
The Western
European market remained substantially flat with respect to
2006 levels. The market grew in Italy (+7.1%), partly as a
result of government incentives for car park renewal, France
(+3.2%) and Great Britain (+2.5%), while it decreased in
Spain (-1.2%). Demand was down sharply in Germany (-9.2%),
as it remained impacted by accelerated purchasing of
automobiles in the closing months of 2006 in anticipation of
the increase in the German VAT rate from the beginning of
2007.
Fiat Group Automobiles’ share of the automobile market
improved to reached 31.3% in Italy (up 0.6 percentage point)
and 8.0% in Western Europe (up 0.5 percentage point). In
Brazil, where automobile market demand continued to be
particularly buoyant (up 26.4% from 2006), Fiat Group
Automobiles achieved a 31.9% increase in deliveries and a
market share of 25.9% (up 0.6 percentage point), thereby
retaining its number one position in the Brazilian market.
Deliveries increased by 18.6% in Poland, with a market share
of 10.1% (down 0.2 percentage point), within the context of
a market that grew by 22.9%.
The light commercial vehicles range also scored many
successes in 2007, mainly due to the New Ducato, the New
Doblò and the New Scudo (whose sales started in January
2007). A total of 387,900 light commercial vehicles were
delivered (up 19.9%); in Western Europe deliveries increased
by 12.5%, while demand rose by 6.6% over 2006. Fiat
Professional’s market share stood at 11.7% in Western Europe
(up 0.7 percentage point). Market share was 42.1% in Italy,
down 3.1 percentage points from 2006, due to the
finalization of significant quadrennial fleet contracts in
2006.
In 2007 Fiat Group Automobiles had a trading profit of €803
million (3.0% of revenues) a sharp improvement (up €512
million) from the €291 million (1.2% of revenues) reported
in 2006. The increase is mainly attributable to higher
volumes, a more favourable product mix following the
introduction of new models, increased absorption of fixed
production costs, net of higher costs for research and
development, advertising and network development supporting
intensive product program and commercial strategy in both
Western Europe and Latin America.
In Q4 2007 Fiat
Group Automobiles had revenues of €7.2 billion, 12.8% higher
than Q4 2006, due to increased volumes. Trading profit
totaled €233 million, up €138 million from Q4 2006. In Q4
2007, deliveries of automobiles and light commercial
vehicles increased by 9.9% from Q4 2006. In Western Europe,
volumes rose by 2%, with positive performances in the main
countries, except for Germany and Great Britain. Market
share stood at 7.9% (up 0.4 percentage point) in Western
Europe, while it reached 31.0% (up 0.2 percentage point) in
Italy.
In 2007 Maserati
had revenues of €694 million, an increase of 33.7% from 2006
due to the excellent performance of the automatic version of
the Quattroporte and of the new Maserati GranTurismo, whose
sales started in July. Deliveries to the sales network rose
30.7% to 7,496 units. Maserati had a trading profit of €24
million (3.5% of revenues), a sharp improvement (up €57
million) from the loss of €33 million reported in 2006.
Higher volume and cost containment initiatives enabled
Maserati to report a positive trading result for the first
time since its entry into the Fiat Group in 1993. Maserati
had revenues of €209 million in Q4 2007, up 45.1% from Q4
2006. Quarterly trading profit also increased significantly,
from a loss of €1 million in Q4 2006 to a trading profit of
€18 million in Q4 2007.
2007 brought many important launches for Maserati. The
January launch of the automatic version of the Quattroporte
at the Detroit Motor Show was followed by the presentation
in March at the Geneva Motor Show of the new Maserati
GranTurismo, a high-performance coupe which is also a
genuine four-seater. The new Quattroporte Sport GTS was
launched in September at the Frankfurt Motor Show and was
particularly well received.
In 2007, Ferrari had revenues of €1,668 million, up 15.3%
from 2006, mainly due to the success of the F430 and 599 GTB
models. Deliveries to the network totalled 6,488 units, an
increase of 11.1% from 2006. Sales to end customers totalled
6,584 units, up 12.3% from 2006. Volumes were boosted by
sales in the United States, and in Eastern European and Far
East markets. Ferrari closed 2007 with a trading profit of
€266 million, up 45.4% from €183 million in 2006. The
improvement is mainly attributable to higher sales volumes
and efficiency gains, offset in part by increased R&D
expenses and unfavourable US dollar exchange rate. Trading
margin was 15.9% in 2007, 3.3 percentage points higher than
in 2006. In Q4 2007 Ferrari had revenues of €496 million, an
increase of 21.3% from Q4 2006. Trading profit totalled €109
million, an increase of €28 million from Q4 2006.
The new F430
Scuderia was presented in September at the Frankfurt Motor
Show. This high-performance two-seater berlinetta is derived
from Ferrari’s experience in Formula 1, where in 2007
Ferrari won both the Constructors’ and the Drivers’ Titles
for the fifteenth time.
Agricultural
and Construction Equipment
In 2007 CNH – Case New Holland had revenues of €11.8
billion. The increase of 12.5% from 2006 was negatively
impacted by the euro/dollar exchange rate; in US dollar
terms, revenues rose by 22.8%, as a result of higher
volumes, improved mix and prices, as well as new products.
In 2007 the global market for agricultural equipment grew by
2% over 2006. In North America demand for tractors and
combines rose by 2%. Increases in both product lines were
also recorded in Western Europe and in Latin America, where
demand for tractors and combine harvesters rose sharply. In
the Rest of the World demand for tractors decreased, against
a very positive performance for combines. All CNH brands
gained market share, with particularly significant
improvements in combines and high horsepower tractors.
In 2007, global
deliveries of CNH agricultural equipment to the dealer
network and retail unit volumes increased in all markets.
The global construction equipment market grew by 13% over
2006. Demand for both heavy and light equipment grew
significantly in all main geographic regions apart from
North America, where it declined by 12%. Worldwide CNH
construction equipment deliveries to the network and retail
unit sales increased, with strong growth in Western Europe,
Latin America and in the Rest of the World, more than
offsetting the decline, in line with the unfavourable
performance of the market, reported in North America.
CNH had a
trading profit of €990 million, representing a trading
margin of 8.4%, up from 7% in 2006. The €253 million
improvement (up 34.3%; up 46.7% in US dollar terms) from the
€737 million of 2006 was mainly due to higher sales volume,
a more favourable mix and pricing related to the recovery of
higher raw material costs, as well as benefits deriving from
improved product quality.
In Q4 2007 CNH
had revenues of €3,060 million, up 20.1% (up 34.7% in US
dollar terms) from Q4 2006. The strong increase in sales
volumes of agricultural equipment, with a significant
contribution from high horsepower tractors and combines, as
well as construction equipment, with very positive trends
outside North America, were the basis for this improvement.
CNH had a Q4 2007 trading profit of €228 million, an
increase of €38 million from €190 million of Q4 2006.
During the year, New Holland Agricultural Equipment launched
two important tractor lines, the T6000 Series and T7000
Series, which won the prestigious ”Tractor of the year”
award and the “Golden tractor for Design” award, as well as
the “Eye on Biodiesel” award for innovation. The brand also
launched the T9000 Series 4-wheel-drive tractors, the T8000
Series row crop tractors, as well as the T5600 Series
tractors in the Chinese market, targeting a growing market
segment. The FR9000 forage harvester won the “Machine of the
Year” award and the new CR 9000 Elevation combine won medals
for innovation.
Case IH Agricultural Equipment began shipping the new Puma™
Series tractors, the new Axial-Flow® 7010 combine harvester,
as well as the Module ExpressTM 625 cotton picker/packager,
enabling farmers to pick, transfer and pack cotton with one
single machine. The brand also launched its new series of WD
3 self propelled windrowers and a new A7700 sugar cane
harvester with Tier 3 engines. Case Construction launched
the new Tier 3 CX B Series hydraulic excavators offering
significant improvements in productivity, fuel efficiency
and noise levels. It also launched the new M Series 2
backhoe loaders, the E Series wheel loaders and the
high-powered 1650L crawler dozer in North America, the first
model in its new L Series line. New Holland Construction
launched new models of skid steer loaders with upgraded
engines and cabs and additional features, celebrating its
35th anniversary of skid steer loader production. It also
launched new Tier 3 products in Latin America including E215
and E330 crawler excavators, new skid steer loaders and
backhoe loaders and, in Europe, an upgraded Tier 3 E245
crawler excavator with improved performance and
productivity.
Trucks and Commercial Vehicles
In 2007, Iveco revenues topped €11 billion, up 22.5% from
2006, as a result of higher sales volumes in Western and
Eastern Europe and improved pricing. In 2007 Iveco delivered
a total of 211,700 vehicles (including 13,300 units with buy
back commitments), an increase of 16.6% over 2006, driven by
light and heavy segments. In Western Europe deliveries rose
9.1% to 147,500 units. Among the principal countries,
particularly positive performances were seen in France
(+12.9%), Germany (+12.4%) and Italy (+7.9%). Deliveries
increased by 2.9% in Spain, while were down in Great
Britain. Volumes rose sharply in Eastern Europe (+58%) and
Latin America (+45%).
In 2007, Western European demand for commercial vehicles
(curb weight > 2.8 tons) rose 10.9% from 2006, driven by
growth in the light vehicle segment (+15.4%), where demand
rose in particular for car-derived vehicles. Changes in
demand for heavy vehicles (+2.3%) and medium vehicles
(-5.3%) were negatively influenced by the high number of
registrations recorded in 2006 prior to the introduction of
the digital tachograph and the new emission regulations
applicable to these vehicles. In 2007, Iveco’s share of the
Western European market (10.3%) declined slightly (-0.3
percentage point) due to a drop in the light vehicle segment
(-0.4 percentage point), negatively impacted by competition
from car-derived vehicles (vans), while medium and heavy
segments posted increases of 0.7 percentage point and 0.5
percentage point, respectively.
In 2007, sales benefited from the success of both the light
and the heavy vehicles ranges. The new Daily is continuing
to earn awards and recognitions throughout Europe: in Spain
it received the “Light truck of the year” award and in Great
Britain it was named “Best Light Truck 2007”. The new
Stralis heavy vehicle, whose range includes Compressed
Natural Gaspowered CNG versions, was launched in March 2007.
Its success, confirmed by the over 35,000 orders received
since its launch, had a positive impact on Iveco’s growing
share of the heavy vehicle market in Europe. The Stralis
received an award for the most comfortable cabin in its
category.
During the year, the new Trakker, an off-road dump truck and
construction vehicle with two new cabin models, the CNG
Daily and the new Daily 4x4 also made their debut. Iveco
Irisbus launched two new buses: Citelis, an urban transport
bus with minimum environmental impact, and the Magelys
touring bus, a coach at the top of the Sector’s product
range. The All Blacks sponsorship was recognized as one of
the most effective sponsorship communication campaigns at
the fourth edition of the Press & Outdoor Key Award.
Iveco had a trading profit of €813 million (7.3% of
revenues), a sharp improvement (+48.9%) over trading profit
of €546 million in 2006 (6.0% of revenues). The increase is
mainly attributable to strong growth in sales volume and
better pricing from the competitive repositioning of Iveco’s
products, especially heavy vehicles, partially offset by
higher costs both for research and development and the
international expansion initiatives started by Iveco over
the last 2 years. In Q4 2007, Iveco had revenues of €3.3
billion, up 21.8% from Q4 2006. Trading profit was €249
million, up 58.6% from Q4 2006.
Components and Production Systems
In 2007, revenues of FPT Powertrain Technologies totalled
€7.1 billion, an increase of 15.1% over 2006, as a result of
the significant growth in volumes (the bulk of which is due
to higher demand by Fiat Group Automobiles and Iveco). Sales
to third parties and joint ventures represented 24% of
revenues (26% of revenues in 2006) but volumes were up 3.0%
over the prior year. In 2007, revenues of the Passenger &
Commercial Vehicles product line totalled €3.9 billion (up
12.9% over 2006), 79% of which earmarked for Group companies
and the remainder mainly representing sales of diesel
engines to third parties. During the year, 2,597,000 engines
(+11.5%) and 2,093,000 transmissions (+23.5%) were sold.
The Industrial & Marine product line had revenues of €3.2
billion, an increase of 18.2% compared with 2006. Sales to
Fiat Group companies accounted for approximately 74% of the
total (72% in 2006). A total of 505,000 engines (+13.9%)
were delivered, mainly to Iveco (45%), CNH (19%) and the
Sevel joint venture (26%). In addition, 123,000
transmissions (+8.4%) and 300,000 axles (+14.4%) were sold.
In 2007, FPT had a trading profit of €271 million, an
increase of €103 million (+61.3%) over 2006, resulting in an
improvement in trading margin from 2.7% in 2006 to 3.8% in
2007. The improvement is mainly due to efficiencies in the
purchasing and manufacturing areas and growth in volume,
while higher costs for international business development
impacted trading results.
In Q4 2007, FPT Powertrain Technologies had revenues of €1.9
billion (22% of which to third parties and joint ventures),
an increase of 16.3% from Q4 2006. The Passenger &
Commercial Vehicles product line posted revenues of €1,043
million (up 12.8%). The Industrial & Marine product line had
revenues of €850 million (+22.1% over Q4 2006). In Q4 2007,
FPT had a trading profit of €87 million, an increase of 74%
compared to the trading profit of €50 million in Q4 2006.
In 2007, FPT began production of the new T-JET 1.4 engine in
the 120 and 150 HP versions and continued development of the
new Multiair technology, applied to both aspirated and turbo
engines. After introduction of the Fire 1.2 CNG engine on
the Panda, development continued on a new application of a
methane 1.4 Turbo. The number of diesel engines equipped
with an anti-particulate filter (DPF) grew further during
the year (+8.5%). The Euro 5 compliant 1.3 diesel engine was
completed and started to be offered on the new Fiat 500.
As regards
industrial, marine and agricultural applications, FPT began
production of the new CNG-powered S30 light engine. It also
launched the F32 engine for agricultural and earth moving
applications, with the aim of improving the Company’s
competitiveness in the 37-74 Kw segment. The N60-480 marine
engine was launched to further enrich FPT’s NEF (New Engine
Family) product line, which now ranges from 270 to 480 HP.
Production of the first Ducato models, equipped with 2.3
litre S23 engines, began in Russia under the agreement with
Severstal. Production of the 420 Kw Cursor 13 Turbocompound
for tractors began in H2 2007.
In 2007 Magneti Marelli had revenues of €5 billion, an
increase of 12.2% over 2006. The impact of the
consolidation, as of May 2007, of the After Market Parts &
Services business was largely offset by the effect of the
sale to Fiat Group Automobiles of the activities for the
final assembly of suspension systems earmarked for Fiat
models, which took place in Q2 2006. On a comparable
consolidation basis, revenues increased by 11.7%.
Magneti
Marelli’s positive performance was due to higher volumes
sold both to Fiat Group and to third parties. The Lighting
business, with its high-tech products and a high incidence
of sales to third parties, posted significant increases in
volumes in all its principal markets (Germany, Nafta area,
Brazil), as well as in Turkey and China. Sales of Selespeed
systems and Gasoline Direct Injection systems in Europe, as
well as higher volumes in Brazil and China, drove
improvements in the Engine Control business line. Revenues
of the Electronic Systems business benefited from higher
sales of passenger compartment modules earmarked for Fiat
customers and instrument panels for third parties. The
positive performance of Suspensions Systems in Poland, Italy
and Brazil is mainly connected to its main customer, Fiat.
Exhaust Systems grew on the back of higher sales to Fiat
(Italy, Poland and Brazil) and to third parties (Brazil and
Spain).
Magneti Marelli
had a trading profit of €214 million, an increase of €24
million compared to 2006. Higher sales volumes and
efficiency gains compensated price pressures, increased raw
material prices and new product start-up costs. Trading
margin was 4.3%, in line with 2006. In Q4 2007, Magneti
Marelli had revenues of €1.3 billion. On a comparable scope
of operations, the increase was 12.1%. Trading profit was
€69 million, compared to €54 million in Q4 2006.
In 2007, Teksid reported revenues of €783 million, down 20%
from 2006. The decrease is mainly due to the sale of the
Magnesium activities at the beginning of March 2007, which
was only partially compensated by the consolidation of
Teksid Aluminum starting in September 2007. On a comparable
scope of operations, revenues were down 3.4%, due to a 3.8%
drop in volume at the Cast Iron business. Lower sales in
North America were partly offset by positive performance on
the Brazilian and European markets.
Teksid closed
2007 with a trading profit of €47 million, which was
impacted by the trading loss of €9 million of Teksid
Aluminum, against a profit of €56 million in 2006, which
included the positive result of €16 million relating to sold
activities. On a comparable scope of operations, the
improvement of €16 million was due to efficiency gains,
which more than offset higher energy and materials costs. In
Q4 2007, Teksid posted revenues of €228 million, down 3.4%
from Q4 2006. On a comparable basis, revenues grew
approximately 1%. Teksid had a trading profit of €2 million
in Q4 2007, down from €11 million in Q4 2006, due to the
change in the scope of consolidation. On a comparable basis,
trading profit increased by €2 million.
In 2007, Comau
had revenues of €1,089 million. The decrease of 14.9% from
2006 is mainly due to the North American operations, which
were impacted by difficult trading conditions and
unfavourable exchange rate trends. Lower decreases were
reported by the Body-welding and Powertrain operations in
Europe and by the Service businesses, in line with the
reshaping of the scope of operations. The order intake for
2007, totalling approximately €1.2 billion, was virtually in
line with 2006, as a result of stable contract work, while
Service activities increased in the Mercosur countries
against a decrease in orders reported in Europe. At the end
of 2007 the order backlog totalled €582 million, down 1.9%
from 2006 year end.
Comau closed
2007 with a trading loss of €23 million (reported in Q1 and
followed by substantial breakeven in the rest of the year),
a substantial improvement from the loss of €66 million
recorded in 2006. The improvement is the result of the
reshaping plan launched in the second half of 2006, and
effects of which are starting to be felt. The most
significant positive changes were reported by the
Body-welding operations in Europe. In Q4 2007, Comau had
revenues of €297 million, down 12.6% from Q4 2006. Trading
profit totalled €1 million compared with a trading loss of
€37 million in Q4 2006.
Other Businesses
In 2007, Itedi
had revenues of €391 million, down 2.5% from 2006 due to
lower advertising revenues at Publikompass. In 2007, Itedi
had a trading profit of €12 million, against a profit of €11
million in 2006. The improvement is mainly attributable to
editorial, industrial and distribution cost-containment
initiatives at Editrice La Stampa, which more than offset
the termination of government paper cost subsidies. In Q4
2007, Itedi had revenues of €107 million, down 10.1% from Q4
2006. Trading profit totalled €8 million in Q4 2007, in line
with Q4 2006.
In 2007, the
trading loss of all remaining activities, including Holding
companies and Other companies and the impact of eliminations
and consolidation adjustments, rose by €52 million, mainly
due to the non-cash costs of stock options plans, a
different scope of operations (disposal of Banca Unione di
Credito and other minor activities), as well as lower
activities on the High Speed Railway contract (TAV). In Q4
2007 trading loss totalled €57 million, compared with a loss
of 66 million in the same period of 2006.
A pivotal
year for the Fiat Group
2007 was an important year for the future of the Fiat Group
mainly for three reasons:
• The industrial turnaround plan, outlined in the Balocco
investor’s meeting in July 2004, was completed and all of
the targets set then for each of the sectors and for the
Group as a whole were achieved, and in many cases exceeded.
• The Fiat Group industrial operations are finally debt free
and close to fully regaining its investment grade status,
thus marking an additional clean break with the recent past.
• Fiat started the implementation of the 2007-2010 growth
and margin expansion plan, presented in November 2006, which
will transform the Group into a significant international
industrial enterprise.
The efforts made in the period 2004-07, aimed at reshaping
and strengthening the managerial structure, creating lean
organizations across all businesses, improving the brands’
market positioning , together with the introduction of a
significant number of new products, have resulted in top
line growth and increased margin.
The speed at
which the Group has managed to achieve its operational
turnaround led to the upgrade of its long-term debt rating.
Standard & Poor’s raised its rating on Fiat from “BB” to
“BB+”, with a positive outlook, while Fitch raised its
rating by two notches, thereby bringing it – for the first
time since 2003 – to “investment grade” level with a stable
outlook. Moody’s also raised its rating on Fiat’s long-term
debt from “Ba2” to “Ba1”.
2007 significant events
During the year, the Group continued to pursue its strategy
of strengthening the industrial and commercial structure
through targeted alliances. In this framework, in February,
Iveco and Tata Motors announced the signing of a Memorandum
of Understanding to analyze the feasibility of cooperation,
across markets, in the area of Commercial Vehicles. The
agreement encompasses a number of potential developments in
engineering, manufacturing, sourcing and distribution.
In June, FPT
Powertrain Technologies signed a strategic cooperation
agreement in the field of powertrains with the Daimler Truck
Group. Under the agreement, starting in 2009, FPT Powertrain
will supply Mitsubishi Fuso with around 80,000 light duty
diesel engines per year to be used in the Canter light
commercial vehicle, both in Europe and South-
East Asia.
Again, in June,
Iveco and the industrial group Samotlor-NN, a major Russian
vehicle bodybuilder, signed a joint venture agreement to
progressively localize the production of the Daily light
commercial vehicles in Russia that will lead, in the medium
term, to an installed production capacity of 25,000 units
per year. At the same time, Magneti Marelli and Avtopribor
signed a letter of intent for the creation of a joint
venture in Russia, aimed at the design, development,
production and marketing of electronic instrument clusters
for motor vehicles.
Fiat Group Automobiles signed in August a Memorandum of
Understanding with Chery Automobiles, one of the major
Chinese carmakers and leading car exporter, for the
establishment of a 50-50 passenger car joint venture. The
Company, which will distribute Alfa Romeo, Fiat and Chery
cars, will be operational from 2009. Fiat Group Automobiles
signed a Letter of Intent with the Russian company Severstal
Auto for the creation of a commercial and industrial joint
venture in Russia. The joint company will be responsible for
the sale and marketing of all Fiat branded vehicles (cars
and light commercial vehicles) in the Russian Federation, as
well as the manufacturing facility, where the Fiat Linea
will be produced starting from the first quarter of 2008.
In September,
Magneti Marelli signed a Memorandum of Understanding with
Chery Automobile Co. Ltd under which a joint venture will be
established in China for the production of hydraulic
components for the Selespeed transmission. The new company
will be operational by the spring of 2008 and the components
it will produce will be used by Chery and other
manufacturers. In October, Magneti Marelli signed an
agreement with Suzuki Motor Corporation and Maruti Suzuki
India Limited for the creation of a joint venture in India
for the production of electronic control units for diesel
engines, for Suzuki-Maruti and third party customers. Start
of production is scheduled for the end of 2008 and this
plant is expected to produce a total of about 500,000
control units per year when fully operational.
In December,
Fiat withdrew from the Nanjing-Fiat joint venture, selling
to NAC its equity stake, so that it can freely move and
fully concentrate on the restructuring of its automotive
business in China. NAC will remain a very important partner
for Fiat in the commercial vehicle sector, through the joint
venture with Iveco, which has generated mutual satisfaction
over the years.
Of particular
importance was Fiat’s decision in December to launch an
extraordinary plan for the industrial relaunch of the
Pomigliano d’Arco (Naples, Italy) plant. The challenging
project aims at completing the integration of the plant into
the Fiat Group Automobiles manufacturing system and will be
realized through an important plan of technological
investments worth a total of €70 million. These investments
will be accompanied by intensive training programs for
employees, in addition to the other €40 million in extra
costs stemming from the suspension of production (January 7
– March 2, 2008) necessary to complete the plan. The
objective is to bring this plant to best-in-class
performance levels and ensure that it will be able to meet
the conditions necessary for the allocation of production of
new future models.
According to the
provisions of the agreement signed at the beginning of 2008,
Magneti Marelli and Sumi Motherson Group will create a joint
venture in India aimed at the production of automotive
components in the area of lighting and engine control
systems, activities will target the Indian market and the
local and international carmakers operating in the
territory.
On the basis of
the share buy-back program announced in April 2007, as of
December 31, 2007 the total number of ordinary shares
purchased amounted to 20.482 million, for a total invested
amount of €426.0 million. The share buy-back program is
continuing in 2008, following the decision to extend the
Program from December 31, 2007 to April 30, 2008. As today,
the total number of ordinary shares purchased from the
beginning of the program amounted to 31.540 million, for a
total invested amount of €603.4 million. The Group intends
to continue its share-buy back program throughout 2008, and
the Board of Directors intends to submit to the next Annual
Stockholders Meeting the renewal of the related authority.
Outlook for
2008
The Western European automobile market is expected to remain
stable in 2008. In this context, Fiat Group Automobiles
expects to gain market share in Italy and Western Europe,
continuing to leverage on the recently introduced Fiat 500,
Fiat Bravo, Fiat Linea, on the 2008 new model launches (Alfa
Romeo Junior and Lancia Delta HPE), as well as on new
engines.
The Brazilian market should continue to grow, posting in
2008 an increase of more than 10% compared to 2007, and Fiat
operations are expected to maintain their leadership of the
Brazilian market. Higher spending in advertising and network
investments will support Fiat Group Automobiles targeted
volume growth of approximately 200,000 units in 2008.
The agricultural
equipment market is expected to grow in North America,
Europe and in Latin America and to remain flat in the Rest
of the World. High global commodity prices and low levels of
agricultural stocks will lead to strong net farm incomes.
Increasing demand for corn and sugar cane to produce fuel
ethanol continues to support equipment sales. The
construction equipment market is expected to grow in Europe
and in the Rest of the World, to be flat in Latin America
and to decrease in North America. In the United States,
further declines in residential construction should be
partly offset by higher non-residential and heavy
construction activity. In North America, housing starts are
expected to continue declining but will potentially
stabilize later in the year; housing starts are expected to
be flat in Europe, Latin America and in the Rest of the
World. In this context, CNH expects to achieve a strong
improvement in unit volume along with continuing market
share gains. Momentum of positive net pricing offsetting
increases in certain raw materials and components will
continue.
In Western
Europe, the market for light, medium and heavy commercial
vehicles is expected to keep on growing, notably in the
first half of the year. Central and Eastern European markets
are expected to grow about 15% compared to 2007. In this
environment Iveco aims at gaining market share thanks to new
products (Daily 4X4, Massif and New Eurocargo) and is
targeting revenue growth due to price repositioning and
higher volumes.
To achieve its
targets, the Fiat Group will continue to push group-wide
purchasing synergies, intensifying and accelerating
development of best-cost-country sourcing, strengthening
strategic partnerships with suppliers through long-term
contracts, and focusing on the implementation of world-class
manufacturing initiatives.
The Group
confirms its targets for 2008: trading profit between € 3.4
and € 3.6 billion, net income between € 2.4 and € 2.6
billion (earnings per share between €1.90/€2.00).
Consolidated net revenues will be in excess of € 60 billion.
The Group expects to close the year again debt free, with a
minimum of €1.5 billion of net cash on hand (excluding the
impact of share buy-backs).
While working on
the achievement of these objectives, the Fiat Group will
continue to implement its strategy of targeted alliances, in
order to reduce capital commitments, and reduce the related
risks. The Group’s expectations for 2008 are based on the
assumption that the current turbulence in financial markets
will have limited contagion impact on the real economy, and
at worst will be limited to the US market. There is a
concern that the current crisis of confidence being
experienced in the capital markets will spill over and begin
to severely restrict consumption on a global scale. The
Group believes that such a scenario is unlikely:
nonetheless, if such conditions were to effectively
materialize, the Group believes that it would be able to
fully sustain the financial impact of a downward pressure on
demand, albeit with reduced operating performance and
margins.
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