Fiat Chrysler

(30.05% of share capital)

 

 

The main consolidated data of the Fiat Group in the first half of 2013 are as follows:

  Half I  
€ million 2013 2012 (1)
Change
Net revenues 42,082 41,745   337
Trading profit/(loss) 1,647 1,753   (106)
EBIT 1,660 1,767   (107)
Profit/(loss) for the period 466 501   (35)
Profit/(loss) attributable to owners of the parent 59 67   (8)
  At
€ million 6/30/2013 12/31/2012(2)
Total assets 86,169 82,106 
Net debt (10,091) (9,600) 
- of which: Net industrial debt (6,711) (6,545) 
Equity attributable to owners of the parent 6,449 6,187 
(1) Following the application of the amendment to IAS 19 the figures reported for the first half of 2012 have been restated. The effect compared to the previously reported figures for the first half of 2012 is a decrease in profit by €236 million (€5 million higher loss for Fiat excluding Chrysler), of which €123 million (€10 million for Fiat excluding Chrysler) arose from an increase in costs from ordinary operations and €113 million from an increase in financial expenses (€5 million lower expenses for Fiat excluding Chrysler). (2) Following the application of the amendment to IAS 19, the comparative figures have been restated. More specifically, the figure for closing equity reported in the consolidated financial statements at December 31, 2012 has decreased by €4,804 million, of which €2,872 million relates to equity attributable to owners of the parent and €1,932 million relates to non-controlling interest.

Net revenues

Group revenues were €42.1 billion for the period, in line with the first half of 2012 in nominal terms, but up 3% at constant exchange rates.

On a regional basis, revenues in NAFTA were €21.5 billion and substantially flat in nominal terms (+2% at constant exchange rates). LATAM reported revenues of €5.3 billion, a 2% improvement year‐over‐year (+10% at constant exchange rates). APAC increased 41% to €2.1 billion. In EMEA, revenues totaled €9.1 billion, a 3% decrease over the prior year mainly reflecting volume declines in Europe.

Luxury and Performance brands increased revenues by 9% to €1.6 billion, driven by growth in Asia and North America.

For Components, revenues totaled €4.1 billion (in line with the first half of 2012).

  Half I
Change
€ million 2013 2012 %
NAFTA (mass-market brands) 21,509 21,354 0.7
LATAM (mass-market brands) 5,307 5,211 1.8
APAC (mass-market brands) 2,085 1,477 41.2
EMEA (mass-market brands) 9,130 9,428 (3.2)
Luxury and Performance Brands (Ferrari, Maserati) 1,569 1,438 9.1
Components and production Systems (Marelli, Teksid, Comau) 4,055 4,037 0.4
Other 469 480 (2.3)
Elimination and adjustments
(2,042) (1,680) 21.5
Net revenues
42,082 41,745 0.8

Trading profit/(loss)

Trading profit totaled €1,647 million for the first half, a €106 million decrease over the first half of 2012. NAFTA reported a trading profit of €1,065 million, a €209 million decrease over the first half of 2012 (restated for IAS 19 as amended), due to first quarter results that were impacted by lower volumes and increased industrial costs related to the launches of new products. LATAM posted a trading profit of €410 million, down 13% in nominal terms and 5% at constant exchange rates; net of currency translation effects, the decrease was mainly attributable to results for the first quarter which were impacted by a less favorable production mix. APAC increased 41% to €199 million. In EMEA, losses were reduced by €90 million or 26% to €255 million on the back of continued cost discipline and some improvement in product mix. For Luxury and Performance brands, trading profit increased by 3% to €181 million and Components reported a 13% increase to €93 million.

 

EBIT

EBIT was €1,660 million (€1,767 million in the first half of 2012, restated for IAS 19 as amended). For mass‐market brands by region, NAFTA reported EBIT of €1,133 million, a 14% decrease over the first half of 2012 (as restated for IAS 19 as amended) mainly reflecting lower trading profit. LATAM posted €351 million (€473 million in the first half of 2012) as a result of the trading profit performance and net unusual charges related to the devaluation of the Venezuelan bolivar fuerte relative to the U.S. dollar. APAC increased by 20% to €174 million. EMEA reduced losses by €169 million to €185 million (the first half of 2012 included a writedown on the investment in the SevelNord JV).

  At  
€ million 30/06/13 31/12/12 Change
Debt (28,506) (27,889) (617)
- Asset-backed financing (514) (449) (65)
- Bonds, bank loans and other debt (27,992) (27,440) (552)
Current financial receivables from jointly-controlled financial services companies (1) 57 58 (1)
Gross debt (28,449) (27,831) (618)
Cash, cash equivalents and current securities 17,969 17,913 56
Other financial assets (liabilities) (2) 389 318 71
Net debt (10,091) (9,600) (491)
  Industrial Activities (6,711) (6,545) (166)
  Financial Services (3,380) (3,055) (325)
(1) Includes current financial receivables from FGA Capital Group. (2) Includes fair value of derivative financial instruments.

Profit/(loss) for the period

Net financial expense totaled €945 million, a decrease of €6 million over the first half of 2012. Net of the marking‐to-market of the Fiat stock option‐related equity swaps (gains of €36 million in the first half of 2013 and €29 million in the first half of 2012), net financial expense was in line with the first half of 2012. 

Profit before taxes was €715 million (€816 million in the first half of 2012, restated for IAS 19 as amended). The €101 million decrease reflected a €107 million decrease in EBIT and the decrease in net financial expense.

Income taxes totaled €249 million. Excluding Chrysler, income taxes were €189 million and related primarily to the taxable income of companies operating outside Italy and employment‐related taxes in Italy.

Net profit was €466 million for the first half of 2013 (€501 million for the first half of 2012, restated for IAS 19 as amended). For Fiat excluding Chrysler, the net loss was reduced by €42 million over the first half of 2012 to €482 million.

Profit attributable to owners of the parent in the first half of 2013 was €59 million compared with €67 million for the first half of 2012.


Equity

Equity attributable to owners of the parent ofFiat S.p.A.at June 30, 2013 amounted to €6,449 million compared with €6,187 million at December 31, 2012.

 

Net debt

At June 30, 2013, consolidated net debt totaled €10,091 million, up €491 million over the beginning of the year. Excluding Chrysler, net debt was €725 million higher, with €1.6 billion in capital expenditure and a €0.5 billion increase in the financial services portfolio only partially compensated for by €1.3 billion in income-related cash inflows.

For Chrysler, net debt was down €234 million to €1,263 million, primarily reflecting €2 billion in cash flow from operating activities and €1.9 billion in capital expenditure for the period.

  At  
€ million 30/06/13 31/12/12 Change
Debt (28,506) (27,889) (617)
- Asset-backed financing (514) (449) (65)
- Bonds, bank loans and other debt (27,992) (27,440) (552)
Current financial receivables from jointly-controlled financial services companies (1) 57 58 (1)
Gross debt (28,449) (27,831) (618)
Cash, cash equivalents and current securities 17,969 17,913 56
Other financial assets (liabilities) (2) 389 318 71
Net debt (10,091) (9,600) (491)
  Industrial Activities (6,711) (6,545) (166)
  Financial Services (3,380) (3,055) (325)
(1) Includes current financial receivables from FGA Capital Group. (2) Includes fair value of derivative financial instruments.

 

Significant events during the first half and subsequent events

On January 9, Chrysler Group announced that it had received a demand from the United Auto Workers’ Retiree Medical Benefits Trust (VEBA), pursuant to the terms of the Shareholders Agreement, seeking registration of approximately 16.6% of Chrysler Group’s outstanding equity interests currently owned by VEBA.

On January 18, Fiat Group Automobiles S.p.A. and Mazda Motor Corporation signed a final agreement for the development and manufacture of a new roadster for the Mazda and Alfa Romeo brands based on Mazda’s next-generation MX-5 rear-wheel-drive architecture. Each model will be powered by proprietary engines unique to the respective brands. Both vehicles will be manufactured at the Mazda plant in Hiroshima, Japan. Production of the Alfa Romeo model is scheduled to begin in 2015.

On February 6, Chrysler Group announced an agreement with Santander Consumer USA Inc. (SCUSA) under which SCUSA, beginning May 1, 2013, would provide a full range of wholesale and retail financing services to Chrysler Group’s dealers and consumers under the Chrysler Capital brand name. 

On February 25, Fitch Ratings lowered its rating on Fiat S.p.A.’s long-term debt from BB to BB-. The short-term rating was confirmed at B. The outlook is negative.

On March 15, Fiat issued a €1.25 billion bond (fixed coupon 6.625%, due March 2018). The Notes – issued by Fiat Finance and Trade Ltd. S.A. and guaranteed by Fiat S.p.A. under the GMTN Program – were rated B1 by Moody’s, BB- by Standard & Poor’s and BB- by Fitch.

On April 9, Fiat S.p.A. shareholders approved the 2012 financial statements and the motion for allocation of 2012 net result. Shareholders also approved the Compensation Policy, pursuant to Article 123-ter of Legislative Decree 58/98, and renewed authorization for share buybacks up to a maximum amount of €1.2 billion, inclusive of the €259 million in Fiat shares already held.

On June 21, Chrysler Group LLC announced that it had taken advantage of market conditions and its improved credit profile to reduce the interest rate for its $3.0 billion Tranche B Term Loan and its undrawn $1.3 billion revolving credit facility. In addition, certain loan covenants were amended to be consistent with those in the Company’s bond agreement. The interest rate re-pricing is expected to reduce annual interest costs by approximately $50 million. In addition, a call premium of $29.5 million was paid in connection with the transaction.

Also on June 21, Fiat S.p.A. signed an agreement for a €2 billion 3-year committed revolving credit facility to replace the €1.95 billion 3-year revolving credit facility signed in July 2011. The syndication was successfully completed on July 18 with 19 banks. As a result of the positive response, the facility was increased on that date from €2.0 billion to €2.1 billion.

In connection with its participation in the recapitalization of RCS MediaGroup S.p.A. (RCS), on June 28 Fiat announced it had purchased 10,700,000 rights on the regulated market entitling it to subscribe to 32,100,000 new RCS ordinary shares. Additionally, Fiat committed to subscribing to its pro rata share of the RCS capital increase for a total of 34,608,429 ordinary shares, as well as purchasing additional rights offered by other members of the RCS shareholder agreement entitling it to subscribe to a further 9,082,788 RCS ordinary shares. In total, Fiat subscribed to 75,791,217 new RCS ordinary shares for a total amount of nearly €94 million (including cost of the rights). Following completion of the RCS capital increase on July 17, Fiat holds 87,327,360 RCS ordinary shares, representing 20.55% of new ordinary share capital.

On July 8, Fiat notified the United Auto Workers’ Retiree Medical Benefits Trust (VEBA) of the exercise of its option to purchase a third tranche of the interest held by VEBA in Chrysler Group LLC, representing approximately 3.3% of Chrysler’s outstanding equity. Fiat’s calculation of the net amount payable to purchase this third tranche is $254.7 million. On July 3, 2012, Fiat exercised its option to purchase a first tranche of VEBA’s equity interest in Chrysler, corresponding to approximately 3.3% of Chrysler’s outstanding equity. On September 26, 2012, Fiat sought a declaratory judgment in the Delaware Chancery Court to confirm the price to be paid. On July 31, 2013, in its ruling, the Delaware court granted Fiat judgment on the pleadings on two of the most significant issues in dispute in the litigation. The court also denied, in its entirety, the VEBA’s cross-motion for judgment on the pleadings, including the VEBA’s claim that it is barred from selling its Chrysler membership interests at the price determined by the call option agreement pursuant to the Department of Labor’s Prohibited Transaction provisions.

On January 3, 2013, Fiat exercised its option to purchase a second tranche of VEBA’s equity interest in Chrysler, corresponding to approximately 3.3% of Chrysler’s outstanding equity. Following completion of the purchase of the three tranches, Fiat will hold 68.49% of Chrysler’s outstanding equity.

On July 9, Fiat CEO Sergio Marchionne presented plans for future activities at the plant of Sevel (a 50/50 JV between Fiat and PSA Group for the production of Light Commercial Vehicles) located in Atessa, Italy, where the Ducato is currently produced. Approximately €700 million is to be invested in the existing facility over 5 years. Together with application of World Class Manufacturing standards, this will enable Sevel to further improve its standing as one of the most advanced automotive production facilities in the world.

Commercial Register No.64236277 Legal notes | Credits