FCA Board of Directors' Meeting: Third Quarter 2014 Results

LONDON, October 29, 2014 /PRNewswire/ --

• Worldwide shipments were 1.1 million units, an increase of 10% driven by strong sales performance in NAFTA.
• Revenues were up 14% to €23.6 billion.
• EBIT was €926 million, up 7% (+10% at constant exchange rates - CER) with improvements in all segments except LATAM where weak market conditions continued.
• Net profit was €188 million in line with Q3 2013.
• Net industrial debt was up €1.7 billion in the quarter, due to normal seasonality and in line with the change in Q3 2013.
• Group confirms full-year guidance.

"The Group's third-quarter results demonstrate a solid performance in the face of challenging market conditions particularly in Latin America," said FCA CEO Sergio Marchionne, "and we are on track to deliver on our full-year targets for 2014. With the formal creation of FCA and its debut listing on the NYSE, we have embarked on a new phase as a global company with even greater possibilities."

Revenues increased by €2.9 billion year-over-year to €23.6 billion, driven mainly by NAFTA (+20%), APAC (+30%) and Luxury Brands (+35%), with increases also for EMEA (+6%) and Components (+11%). These increases were partly offset by a 12% reduction for LATAM, where vehicle shipments were down 14% due to continued weakness in the region's main markets.

EBIT totaled €926 million for the quarter, a 7% increase (+10% CER) from €862 million for Q3 2013. Excluding unusual items, EBIT increased by €99 million on the back of strong performance for APAC and Luxury Brands. EMEA reduced EBIT losses by 46%, benefiting primarily from better product mix. For NAFTA, EBIT was up €13 million, despite the impact of higher warranty and recall costs. For LATAM, there was a decrease of €118 million reflecting lower volumes, €15 million in higher unusual charges and €14 million in start-up costs for the Pernambuco plant.

Net financial expense totaled €511 million, €18 million higher than in Q3 2013. Excluding the impact of the Fiat stock option-related equity swaps, which expired in Q4 2013 (gain of €24 million in Q3 2013), net financial expense was substantially in line with the prior year, reflecting the benefits of the Chrysler refinancing transactions completed in February which offset the impact of higher average debt levels.

Income taxes totaled €227 million, compared with €180 million in Q3 2013, principally due to higher deferred tax expenses compared to prior year.

Net profit for the quarter was €188 million, in line with Q3 2013. Profit attributable to owners of the parent was €174 million compared with a €15 million loss for Q3 2013.

Net industrial debt at September 30, 2014 was €11.4 billion, up from €9.7 billion at June 30, 2014. The €1.7 billion increase primarily reflects seasonal cash absorption. Investments in tangible and intangible assets rose to €2.1 billion, in line with full-year guidance, from €1.8 billion in Q3 2013.

Total available liquidity was €21.7 billion, in line with June 30, 2014. During the quarter, operating cash absorption and bond repayments at maturity (€2.1 billion) were offset by new bond issuances (€1.6 billion) and bank financing, as well as a favorable €0.9 billion currency translation effect.

2014 Outlook

Group confirms full-year guidance as presented in the Q2 2014 results:

•  Worldwide shipments at ~4.7 million units;
•  Revenues of ≥€93 billion;
•  EBIT^(*) in €3.6 to €4.0 billion range;
•  Net Income in ~€0.6 to €0.8 billion range, with EPS to improve from ~€0.10 (ex-unusual items) to ~€0.44-€0.60. Includes increased deferred tax charge of ~€0.5 billion due to the recognition of net deferred tax assets at year-end 2013 related to Chrysler and excludes unusual items;
•  Net Industrial Debt in €9.8 billion to €10.3 billion range. Includes cash outflows for the January 21^st, 2014 closing of the purchase of the remaining 41.5% minority stake in Chrysler Group LLC from the VEBA Trust (€2.7 billion), in addition to the impact of the retrospective adoption of IFRS 11, effective January 1^st, 2014 (~€0.4 billion).

(*) excluding unusual items

Results by Segment

Shipments were 613,000 vehicles (+21%) and sales^[1] totaled 633,000 vehicles (+18%). Market share was 12.3% in the U.S. (up 110 bps) and 14.9% in Canada (up 60 bps).

Revenues were €13.1 billion (+20%) primarily due to volume growth. EBIT was €549 million (€536 million in Q3 2013), with higher volumes, improved pricing and purchasing efficiencies substantially offset by increased incentives on certain vehicles, unfavorable mix, higher industrial costs, mainly related to base material costs for vehicle content enhancements, as well as higher warranty and recall costs. EBIT margin was 4.2% in Q3 2014, compared with 4.9% for the same period in 2013.

Shipments were 202,000, a decrease of 14% reflecting poor conditions in the principal markets in the region. In Brazil, the Group maintained its leadership with an overall share of 21.4% (+10 bps), with a 3.6 percentage points lead over the nearest competitor. In Argentina, Group market share was 14.1% (+170 bps). For other LATAM countries, the decrease in shipments was mainly attributable to poor trading conditions in Venezuela.

Revenues were €2.2 billion, down 12% primarily due to lower volumes. EBIT decreased from €169 million to €51 million. Excluding unusual items, EBIT decreased by €103 million, reflecting lower volumes, with positive net pricing and mix offsetting higher industrial and other costs, including €14 million in start-up costs for the Pernambuco plant.

Shipments (excluding JVs) totaled 55,000 vehicles (+22%). Group retail sales (including JVs) were up 25% to 66,000 vehicles.

Revenues were €1.6 billion (+30%) mainly driven by higher volumes and better mix. EBIT was €169 million, an increase of €70 million or 71% driven by higher volumes and a better product mix, partially offset by increased sales and marketing spending to support volume expansion in the region.

Passenger car and light commercial vehicle (LCV) shipments totaled 218,000 units, up 3% over Q3 2013. Passenger car shipments were up 1% to 169,000 and LCVs were up 13% to 49,000. European share (EU28+EFTA) for passenger cars was down 10 bps to 5.5% (27.5% in Italy and 3.2% in other markets). For LCVs, European share^[2] (EU28+EFTA) was up 30 bps to 10.9% (43.5% in Italy).

Revenues were €4.1 billion (+6%) on the back of higher volumes, as well as better mix driven by LCVs and Jeep brand sales. EBIT loss for Q3 2014 was €63 million, compared with a €116 million loss for the same quarter in 2013. The €53 million improvement in EBIT was primarily attributable to a more favorable product mix – reflecting the success of the Fiat 500 family, new Fiat Ducato and Jeep brand – in addition to increased volumes and industrial efficiencies, which were partially offset by competitive pricing pressures and higher advertising expense related to the launch of the Jeep Renegade.

Ferrari

Revenues were €662 million (+24%), with 1,610 street cars shipped (+8%). EBIT was €89 million, including €15 million in compensation costs related to the resignation of the former chairman. Net of this item, EBIT was up €16 million with improved sales mix driven by the LaFerrari.

Maserati

Maserati shipped 8,896 vehicles (3,953 in Q3 2013) with continuing strong performance for the Quattroporte and Ghibli. Revenues totaled €652 million (€444 million for Q3 2013). EBIT increased to €90 million from €43 million in Q3 2013 on the back of volume growth.

Magneti Marelli

Revenues were €1,604 million, a 15% increase over Q3 2013. Performance was positive in North America and Europe, down in Brazil and in line with Q3 2013 in China. EBIT was €37 million, an increase of €9 million year-over-year (€16 million excluding unusual items), mainly reflecting higher volumes.

Teksid

Revenues were €152 million, substantially unchanged on a constant scope of operations. Volumes were down 12% for the Cast Iron business unit (on a constant scope of operations) and up 17% for the Aluminum business. EBIT was €2 million, compared with a €2 million loss in Q3 2013.

Comau

Revenues were €335 million with a 4% increase mainly attributable to the Body Welding business. EBIT was €9 million a €2 million decrease from €11 million for Q3 2013. Order intake for Systems totaled €484 million, a 19% increase over the third quarter of 2013 attributable primarily to the Body Welding business.

Brand activity in the quarter

The highlight of the third quarter was the launch of the Jeep Renegade, the first FCA vehicle designed in the U.S. and crafted in Italy for sales to customers in more than 100 countries worldwide. The Renegade marks the Jeep brand's first entry in the small SUV segment.

Fiat launched a teaser campaign for the latest addition to the 500 family, the 500X, just days prior to the Paris Motor Show, where the vehicle was given its debut presentation. The new Fiat Panda Cross and Fiat Freemont Cross were also presented during the quarter.

At The International Motor Show (the "IAA") in Hannover, Fiat Professional gave the world premiere presentation of the new Doblò.

In the state of Texas, which is the largest pickup truck and SUV market in the U.S., the Texas Auto Writers Association awarded the 2015 Jeep Grand Cherokee "SUV of Texas" for the 5th consecutive year, the 2015 Jeep Cherokee "Compact SUV of Texas" for the 2nd consecutive year, the Ram 2500 Heavy Duty "Heavy Duty Truck of Texas" for the 2nd consecutive year and the 3.0-liter EcoDiesel (in the Jeep Grand Cherokee and Ram 1500) "Best Powertrain".

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This document, and in particular the section entitled "2014 Outlook", 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", "intend", 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 reach certain minimum vehicle sales volumes; developments in global financial markets and general economic and other conditions; changes in demand for automotive products, which is highly cyclical; the Group's ability to enrich the product portfolio and offer innovative products; the high level of competition in the automotive industry;  the Group's ability to expand certain of the Group's brands internationally; changes in the Group's credit ratings; the Group's ability to realize anticipated benefits from any acquisitions, joint venture arrangements and other strategic alliances; the Group's ability to integrate its operations; potential 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; 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; various types of claims, lawsuits and other contingent obligations against the Group; material operating expenditures in relation to compliance with environmental, health and safety regulation; developments in labor and industrial relations and developments in applicable labor laws; increases in costs, disruptions of supply or shortages of raw materials; exchange rate fluctuations, interest rate changes, credit risk and other market risks; political and civil unrest; earthquakes or other natural 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 October 29, at 2 p.m. GMT, management will hold a conference call to present the 2014 third 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 website prior to the call.

Interim Consolidated Income Statement

Unaudited

(*)    Adjusted for the retrospective application of IFRS 11.

Translation of financial statements denominated in a currency other than the Euros

The principal exchange rates used to translate other currencies into Euro were as follows:

Interim Consolidated statement of financial position 

Unaudited

(*)    Adjusted for the retrospective application of IFRS 11.

Interim Consolidated Statement of Cash Flows 

Unaudited

(*)    Adjusted for the retrospective application of IFRS 11. Cash and cash equivalents: +€9 million at beginning of the period, +€15 million at end of the period.

[1] For US and Canada, "Sales" represents sales to end customers as reported by the Group's dealer network.

[2] Due to unavailability of market data for Italy since January 2012, the figures reported are an extrapolation and discrepancies with actual data could exist.

SOURCE Fiat Chrysler Automobiles