Fiat Group has
swung back into the black, announcing this morning a
second quarter profit of 113 million euros compared to a
loss of 179 million euros during the same period last
year while revenues rose by 12.5 percent to 14.8 billion
euros. Group revenues
were up 12.5% to 14.8 billion, reflecting better
trading conditions, albeit against weak 2009 levels, in
particular for CNH and Iveco:
- Fiat Group Automobiles (FGA) reported revenues of 7.4
billion (+6.4%) on deliveries of 554,300 cars and light
commercial vehicles (-6.2% vs. Q2 2009). A recovery in
demand in the LCV segment and favorable currency
movements more than compensated for the decline in
passenger car volumes following the phase-out of
eco-incentives in most key European markets. FGA
achieved a 30.3% share in Italy (-4.1 p.p.) and a 7.5%
share for Europe overall (-1.5 p.p.), reflecting the
fall in demand in the smaller car segments. In Brazil,
Fiat maintained leadership with an overall share of
23.3%.
- Agricultural and Construction Equipment (CNH) revenues
were up 16.0% to 3.3 billion, with positive
performances in the Americas and Rest-of-World markets
more than offsetting weak market conditions for
agricultural equipment in Europe, CIS states and
Australia.
- Trucks and Commercial Vehicles (Iveco) reported an
18.3% increase in revenues to 2.1 billion. Demand
increased in all markets and segments, but remains
significantly below the average 2007/2008 level. Total
deliveries were up 32.4% to 34,318 vehicles.
- The Components and Productions Systems business grew
substantially (+35.2% vs. Q2 2009) on the back of
increased production activity in the global automotive
sector.
Trading profit was 651 million, up 341 million, with
a significant year-on-year improvement in trading margin
to 4.4% (2009: 2.4%) attributable to higher volumes,
improving sales mix and continued benefits from cost
containment measures:
- FGA delivered a trading profit of 185 million (+19.4%
vs. Q2 2009). An improved sales mix, linked primarily to
demand in the LCV segment, and purchasing savings were
major contributors to margin growth (2.5% vs. 2.2% for
Q2 2009).
- CNH posted a trading profit of 263 million (123
million for Q2 2009); trading margin at 7.9% (4.3% for
Q2 2009). Both agricultural and construction equipment
delivered stronger performance. The significant
improvement was driven by higher volumes, better pricing
and lower industrial costs.
- Iveco achieved 50 million in trading profit (18
million for Q2 2009), with increases in sales volumes
supported by production efficiencies.
- Components and Productions Systems recovered from a
negative operating performance in Q2 2009 to an 86
million trading profit.
Net industrial debt decreased by 1 billion in the
quarter to 3.7 billion, reflecting primarily the
positive operating performance.
Liquidity was further strengthened to 13.5 billion
(11.2 billion at end of Q1), due to cash flow from
operations and proceeds from a USD 1.5 billion bond
issued by CNH in June.
Activities relating to the demerger presented on April
21st are proceeding as planned.
Group Results - Second Quarter
Group
revenues
for the
second quarter totaled 14.8 billion, a 12.5% increase
(+6.7% at constant exchange rates) over the same period
in 2009, when all Group businesses were suffering the
effects of weak trading conditions. All sectors
contributed to the recovery in the quarter, with
particularly positive top line performance at CNH, Iveco
and all Components and Production Systems Sectors. The
Automobiles business continued to improve, despite the
phase-out of eco-incentives in Italy and Germany.
The Group reported
trading profit
of 651 million for the quarter
(trading margin: 4.4%), compared with 310 million
(trading margin: 2.4%) for the same period in 2009. The
improvement in trading performance was driven by higher
volumes, a better sales mix and the continuing positive
effect of cost containment actions.
Q2 2010 closed with an
operating profit
of 628 million (158 million for
the second quarter of 2009). The 470 million increase
reflects the significant improvement in trading profit
(+341 million) and lower net unusual expense (23
million for Q2 2010 vs. 152 million for Q2 2009, both
primarily attributable to restructuring costs).
Net financial expense
totaled
301 million (161 million for Q2 2009) and included a
19 million loss on the marking-to-market of two stock
option-related equity swaps (39 million gain for Q2
2009). The figure also included a 17 million one-off
charge for the early repayment of a CNH bond (original
maturity in 2014). Net of these items, financial expense
increased 65 million over the prior year, reflecting
the cost associated with maintaining liquidity in excess
of 10 billion.
Profit before taxes
was 374
million (16 million loss in Q2 2009), due to the
significant improvement in operating result (up 470
million) and an increase in investment income (up 60
million), partially offset by higher net financial
expense.
Income taxes
totaled 261
million (163 million for the second quarter of 2009)
and mainly related to taxable income of companies
operating outside Italy and employment related taxes in
Italy (22 million).
Net
profit
for the period was 113 million,
up 292 million over Q2 2009.
During the quarter, Group
net
industrial debt
decreased by 1 billion,
reflecting the strong trading performance and a
reduction in working capital attributable to higher
activity levels. At 30 June 2010, Group
liquidity
was
13.5 billion, up 2.3 billion over the first quarter
due to a USD 1.5 billion bond issued by CNH in June
coupled with positive operating performance.
Group results - First Half
For the
first half of 2010, Fiat Group
revenues
totaled
27.8 billion, an increase of 13.5% over the prior year
(+9.0% at constant exchange rates). The Group reported
trading profit
of 1,003 million (trading margin:
3.6%), up from 262 million for the first half of 2009
(trading margin: 1.1%). The improvement in trading
performance was mainly driven by higher volumes and the
continuing emphasis on cost containment actions.
Operating profit
for H1 2010
was 980 million, compared to 29 million for the first
six months of 2009, due to the significant increase in
trading profit (+741 million) and a 210 million
decrease in net unusual expense.
Net
financial expense
totaled 551 million (371 million
for H1 2009) and included a 32 million loss on the
mark-to-market value of two stock option-related equity
swaps (versus a 53 million gain in the first half of
2009). The figure also included a 17 million one-off
charge for the announced early repayment of a CNH bond
(original maturity in 2014). Net of these items,
financial expense for the period was up 78 million,
primarily due to the cost of maintaining a higher level
of liquidity.
Profit before taxes
was 531
million for the first half (376 million loss in H1
2009), reflecting a significant improvement in the
operating result (up 951 million) and an increase in
investment income (up 136 million), partially offset by
the 180 million increase in net financial expense.
Income taxes
totaled 439
million (214 million for the first half of 2009) and
related to taxable income of companies operating outside
Italy and employment-related taxes (IRAP) in Italy (44
million).
Net profit
for the first half
totaled 92 million, compared with a loss of 590
million for the same period in 2009. Group
net
industrial debt
decreased by 0.7 billion in the
semester, reflecting the positive operating performance
for all businesses.
Automobiles
Fiat Group Automobiles
Second Quarter
Fiat Group Automobiles
closed the
quarter with
revenues
of 7.4
billion, up 6.4% over the second quarter of 2009, driven
by an improved sales mix and favorable currency
movements, offset in part by a decline in passenger car
volumes. At constant exchange rates, revenues were
substantially flat. Fiat Group Automobiles delivered a
total of 554,300 passenger cars and light commercial
vehicles during the quarter, representing a 6.2%
decrease over the second quarter of 2009. In Europe
(EU27 + EFTA), deliveries for Fiat Group Automobiles
fell 13.2% to 325,600 units. Volumes increased in France
(+10.5%), the UK (+0.3%) and Spain, where deliveries
essentially tripled for the second consecutive quarter.
The non-renewal of eco-incentives impacted performance
in Italy (-21.5%) and in Germany (-42.1%).
For passenger cars only, Fiat
Group Automobiles delivered a total of 455,100 vehicles
during the second quarter, an 11.6% decrease over the
same period in 2009. For Europe, the decline was sharper
with deliveries down 17.7% to 273,400 vehicles. There
was a significant fall in Italy (-23.9%) and Germany
(-53.7%), impacted by the disproportionate reduction in
FGA's principal market segments (A and B segments) and
engine classes. Deliveries increased, however, in France
(+4.0%) and Spain (almost triple the Q2 2009 level).
The European passenger vehicle
market decreased 7.3% over Q2 2009, with performance in
principal markets varying significantly as a function of
the availability of eco-incentives. Growth continued in
the UK (+11.8%) and Spain (+35.4%, also benefiting from
purchases prompted by a VAT increase set for July).
France, where the positive effect of government
incentives is tailing off, was down 3.7%. In the absence
of incentives, Italy was down 16.1% and Germany
continued to decline (-33%, with the most significant
impact in the A-segment). In Brazil, demand was down
6.1% - with the gradual effect of the reduction in
indirect local taxes coming to an end in March - but
remained at a solid level. For the second quarter, with
a market environment that was very competitive, Fiat
Group Automobiles market share was 30.3% in Italy, down
4.1 percentage points; excluding the effect attributable
to a sharp reduction in demand for CNG and LPG vehicles,
market share was up 2.5 percentage points. Market share
was 7.5% for Europe overall (-1.5 percentage points).
The Sector achieved gains in Spain (+0.7 percentage
points to 3.2%) and the UK (+0.1 percentage points to
3.1%), while share fell in France (-0.4 percentage
points to 4.1%). In Germany, the significant decline in
demand in FGA's core segments resulted in a reduction in
market share to 3.5% (-1.9 percentage points). In
Europe, the Fiat Panda continued as leader in its
segment, followed by the Fiat 500, which maintained 2009
registration levels despite the significant overall
decline for its segment. For Western Europe only (EU15 +
EFTA), Fiat Group Automobiles recorded a 7.6% share
(down 1.6 percentage points over Q2 2009).
A total of 99,200 light
commercial vehicles were delivered in Q2, representing
an increase of 29.7% over the same period in 2009. For
Europe, deliveries were up 20.9% to 52,300 units. With
the European market experiencing overall growth of
11.7%, Fiat Professional achieved a 13.9% share (-0.5
percentage points). In Italy, market share increased to
44.4% (+4.3 percentage points): the success of both the
new Doblς, launched at the end of 2009, and the CNG
Fiorino contributed to the brand's excellent second
quarter performance. In Brazil, passenger car and light
commercial vehicle deliveries were essentially flat
(-1.0%) compared with the second quarter of 2009. Share
decreased to 23.3% (-1.9 percentage points), but was up
one percentage point over the previous quarter. The new
Fiat Uno, which has been well received by the market,
achieved deliveries of around 20,000 vehicles in the
first few weeks. FGA maintained leadership of the
Brazilian market.
Fiat Group Automobiles closed
Q2 2010 with a
trading
profit
of 185 million, up from 155 million in Q2 2009. The
improvement was attributable to an improved mix,
primarily related to the performance of light commercial
vehicles, purchasing savings and favorable currency
movements, partially offset by lower volumes and higher
advertising spending due to new product launches. During
the quarter, distribution of Chrysler, Jeep and Dodge
vehicles began in Italy, France, Germany, Sweden,
Denmark, the Netherlands and Belgium.
On the product front, the most
important event was the presentation of the Fiat 500 and
the 500C equipped with the new 85hp 2-cylinder TwinAir
engine developed for FGA by FPT Powertrain Technologies,
which offers a reduction in CO2 emissions of up to 30%
compared to other engines with the same performance.
During the period, the Fiat brand also released: the
Fiat 500C by Diesel, a convertible developed by Fiat and
the well-known fashion and design house; new versions of
the Fiat Bravo equipped with the 140hp 1.4 MultiAir
Turbo (Euro 5 compliant) and Start&Stop as standard;
and, the Panda Anniversary, a special edition released
in celebration of the model's 30th anniversary. In May,
the 2011 model year Alfa Romeo 159 was presented with a
refreshed interior and an expanded range of options
packages. In June, the brand celebrated its 100th
anniversary with 4 days of celebrations that involved
the City of Milan, Fiera Milano, the Monza race circuit
and the Alfa Romeo museum. Attending the event were some
3,000 classic cars from 45 countries. At the beginning
of July, Fiat Professional offered an addition to its
Fiat Scudo range with the top-of-class 165hp 2.0
MultiJet that already conforms to the future Euro 5 EU
emissions standards.
The quarter also saw the
commercial launch of some products presented at the
Geneva Motor Show. These included the Alfa Romeo
Giulietta, Abarth Punto Evo and the Abarth 500C. In
addition, there was the special edition Hard Black
from Lancia Delta and the new Doblς Natural Power.
On the production side, major
milestones included the 5,000,000th vehicle produced in
Melfi, Italy since the plants opening in 1993 and the
500,000th Fiat 500 built in Tychy, Poland. Sold in 83
countries worldwide, the Fiat 500 achieved this historic
result within just 31 months of its commercial launch.
Finally, in June, the German auto club ADAC tested 241
vehicles in different categories and fuel types and
reported the Fiat Panda Natural Power as having the best
fuel economy, traveling 724 km on just 30.
First Half
Fiat Group Automobiles closed
the
first half
with
revenues
of 14.2 billion, up 13.5% over
the first six months of 2009, driven by increased
volumes, improved sales mix and favorable currency
movements (+7.2% at constant exchange rates). A total of
1,086,700 passenger cars and light commercial vehicles
were delivered during the first half, up 2.9% over the
same period in 2009 (-2.2% for passenger cars only). In
Europe, deliveries were down 1.6% to 655,800 units
(-6.4% for passenger cars only). Fiat Group Automobiles
achieved significant gains in France (+13.6%), the UK
(+20.7%) and Spain (+180%), that were offset by a
decrease in Germany (-51.6%). In Italy volumes were
unchanged over the prior year. The European passenger
car market remained essentially unchanged over the first
six months of the prior year, with the increase recorded
in the first quarter being essentially reversed during
the second quarter. Demand fell significantly in Germany
(-28.7%), but was offset by increases in all other
principal markets (Italy +2.9%, France +5.4%, the UK
+19.9% and Spain +39.5%). Market share for Fiat Group
Automobiles in Europe was 8.1% (-0.9 percentage points
compared with H1 2009), mainly attributable to
performance in Germany and Italy (where there was a
decrease in demand for vehicles in the ecological CNG
and LPG segments). Share in Germany declined to 3.3%
(-2.1 percentage points over 2009) and in Italy to 30.9%
(-2.5 percentage points). A total of 193,800 light
commercial vehicles were delivered in the first half, an
increase of 36.2% over H1 2009. In Europe, where overall
market demand rose 8.6%, total deliveries increased
33.7% to 106,200 vehicles. Market share for Fiat
Professional rose to 44.9% in Italy (+4.8 percentage
points) and to 13.7% for Europe overall (+0.4 percentage
points). In Brazil, deliveries of passenger cars and
light commercial vehicles increased 3.0%. Fiat Group
Automobiles maintained its market leadership, for both
cars and light commercial vehicles, achieving a share of
22.8% with the overall market increasing 7.3%.
Fiat Group Automobiles posted a
trading
profit
of 338 million for the first half. The increase over
the 125 million figure for H1 2009 was attributable to
higher volumes, an improved product mix, attributable to
demand for light commercial vehicles, purchasing savings
and favorable currency movements, partially offset by
higher advertising spending due to new product launches.
Maserati
For
Q2
2010,
Maserati
reported 174 million in
revenues,
up 56.8% over the same period in 2009. This increase was
attributable to outstanding performance for both the
Quattroporte and the new GranCabrio. A total of 1,697
cars were delivered to the network during the quarter, a
45.2% increase over the same period in 2009.
Trading profit
came in at 8 million
(4.6% of revenues) for the quarter, improving
significantly over the 2 million figure for Q2 2009.
Maserati established a new single-marque championship
for the GranTurismo MC Trofeo, the racing version of the
GranTurismo S, with a race calendar consisting of 7
major European circuits.
Maserati reported 301
million in
revenues
for
H1 2010,
up 33.2% over the same period for the prior year. Sales
to the network totaled 2,902 units for the period,
increasing 24.8% over the first half of 2009 with a
significant contribution from the GranCabrio. Maserati
increased sales volumes in almost all markets, with
particularly notable performances in the UK (+92%) and
China (+147%). As a result of the strong revenue
performance and efficiencies achieved,
trading profit
came to 12 million (4% of
revenues), more than double the 5 million in operating
profit for the first half of 2009.
Ferrari
For
Q2
2010,
Ferrari
reported
revenues
of 489 million,
up 8.7% over Q2 2009. This increase was attributable to
the performance of the Ferrari California in addition to
the positive contribution of the new F458 Italia, 599
GTO and the customization program. A total of 1,615 cars
were delivered to the network during the quarter,
representing a 2.6% increase over Q2 2009. Ferrari
closed the quarter with a
trading
profit
of 77 million (70 million for Q2 2009). This
improvement was attributable both to higher sales
revenues and benefits realized from efficiency measures.
April saw presentation at the Beijing Motor Show of the
Ferrari 599 GTO: the most performing street version of a
vehicle ever built by the maker from Maranello. Derived
from the 599, production of this version will be limited
to just 599 vehicles. Powered by a 12-cylinder, 6-liter
engine and boasting 670 horsepower, it can accelerate
from 0 to 100 in 3.35 seconds and achieve a top speed
335 kilometers per hour. Ferrari was also present at the
International Expo in Shanghai where millions of
visitors passed to admire the Hy-Kers concept car, the
brands hybrid vehicle solution. Also of note was the
launch of the F458 Italia for the US and right-hand
drive markets and the opening of new Ferrari Stores in
Manhattan and Johannesburg.
For
H1
2010, Ferrari recorded
revenues
of 903
million, a slight increase over the same period for the
prior year. The number of deliveries to the network was
up 1.7% to 3,200.
Trading profit
totaled 116 million for the first
half of 2010, compared with 124 million for the same
period in 2009. The negative impact of a less favorable
product mix, mainly in the first quarter, was partly
offset by cost efficiencies.
Significant events: second quarter
2010 and subsequent to 30 June 2010
On April 21st, John Elkann was
appointed Chairman of Fiat, replacing Luca Cordero di
Montezemolo, who resigned from office having
accomplished the mandate given to him by the Company's
core shareholder in May 2004. Mr. Montezemolo continues
as a member of the Fiat Board of Directors and Chairman
of Ferrari. On the same date, Fiat Group held an
Investor Day in Turin, during which the CEO, Sergio
Marchionne, and members of the Group Executive Council
presented the 2010-2014 Business Plan to the financial
community. The Plan marks a new chapter in Fiat's
history and is designed to ensure the Group opportunity
for growth, in particular through the two strategic
projects announced during the presentation. The first is
the envisaged demerger of various activities from Fiat
to create two distinct groups: one focused on the
automobiles business (Fiat, which includes FGA, Ferrari,
Maserati, Magneti Marelli, Teksid, Comau, as well as the
Passenger & Commercial Vehicles business line of FPT
Powertrain Technologies) and the other on the capital
goods business (Fiat Industrial, which includes CNH,
Iveco and the Industrial & Marine business line of FPT
Powertrain Technologies). The second project outlined in
the Business Plan, referred to as
Fabbrica
Italia,
addresses Fiat's commitment to strengthening the
industrial presence of Fiat Group Automobiles in Italy.
In May, as part of the process
to integrate the distribution activities of Fiat Group
Automobiles and Chrysler Group in Europe, the two
companies began reorganization and integration of the
Chrysler and Lancia sales networks. This integration
will lead to the creation of a new network of over 1,000
dealerships across Europe by 2014 under a new mandate.
Early June saw the inauguration of a new plant in China
(located in the automotive industrial district of
Jiading, just outside Shanghai) under the joint venture
formed in January 2009 between Magneti Marelli and
Shanghai Automobile Gear Works (SAGW). This new plant
will produce hydraulic components for around 300
thousand Magneti Marelli FreechoiceTM AMT transmissions
annually. There were also significant developments in
the dialogue with stakeholders on Fiat's vision for the
future of the Giambattista Vico plant in Pomigliano
dArco, which, under the 2010-2014 Business Plan, would
be allocated production of the future Panda.
Negotiations led to the signing of an agreement with the
trade unions FIM, UILM, FISMIC and UGL in June on new
work rules aimed at improving the efficiency and
competitiveness of the plant. At the beginning of July,
Fiat met in Turin with the above mentioned trade unions
for the purposes of implementing the agreement. At the
meeting, the parties expressed their commitment to
adoption of the agreed mechanisms that will guarantee
the necessary operating flexibility for the plant.
Execution of that agreement according to the stipulated
terms and conditions is essential to Fiat maintaining
its commitment to realization of the
Fabbrica
Italia
project.
2010 Outlook
As expected, 2010 is
materializing as a year of transition and stabilization.
The Group expects all of its Sectors to significantly
improve performance over the prior year in the second
semester, with the exception of the Automobiles
business, the performance of which will be impacted by
the reduction and/or elimination of eco-incentives
programs which underpin demand for A and B segment cars
in Western Europe. The Group is continuing to apply the
rigorous cost containment discipline which were
introduced in the latter part of 2008. The capital
expenditures programs are expected to increase over the
abnormally low levels of 2009, with the resumption of a
normalized level of capital commitments across all
Sectors.
Pending the closing and
reporting of Q3 financials, the Group confirms the
following targets for the year: Revenues in excess of
50 billion; Trading profit of 1.1 to 1.2 billion; Net
profit near break even; and: Net industrial debt above
5 billion. It is highly probable, in view of the
Groups performance to date and our forecast of trading
activity for the businesses in the remainder of the
year, that Fiat will upgrade guidance for 2010 when
announcing Q3 2010 results.
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