Fiat Chrysler group announces Q2 results, and revises upwards the full year numbers.

FCA closed Q2 with Net profit at €333 million, up 69%. Adjusted EBIT was €1.5 billion, up 58% driven by strong improvement in NAFTA margin to 7.7%. Group net revenues were €29.2 billion, up 25%. Net industrial debt was €8.0 billion, down €0.6 billion from prior quarter. Full-year guidance revised upwards.

• Worldwide shipments were 1.2 million units, in line with Q2 2014, reflecting strong performance in NAFTA and EMEA, partly offset by continued weak market conditions in LATAM. Jeep's positive performance continued with worldwide shipments up 27%.
• Net revenues increased 25% to €29.2 billion.
• Adjusted EBIT1 was €1,525 million, up 58% from €968 million in Q2 2014, with increases in NAFTA and EMEA, partially offset by decreases in LATAM and APAC. NAFTA margin improved to 7.7%.
• Adjusted net profit2 was €450 million, more than doubling compared to €204 million in Q2 2014.
• Net industrial debt was €8.0 billion, down €0.6 billion from March 31, 2015. Liquidity remained strong at €25.4 billion.
• The Group revised upwards its full-year guidance.

_____________________________

¹ Adjusted EBIT is calculated as EBIT excluding: gains/(losses) on the disposal of investments, restructuring, impairments, asset write-offs and other unusual income/(expenses) that are considered rare or discrete events that are infrequent in nature.

² Adjusted net profit is calculated as Net profit excluding post-tax impacts of the same items excluded from Adjusted EBIT: gains/(losses) on the disposal of investments, restructuring, impairments, asset write-offs and other unusual income/(expenses) that are considered rare or discrete events that are infrequent in nature. Adjusted basic EPS is calculated by adjusting Basic EPS for the impact of the same items excluded from Adjusted EBIT. Refer to page 10 for detailed calculation.

³ EBIT plus Depreciation and Amortization.

⁴ At March 31, 2015.

⁵ At December 31, 2014. 

Net revenues for Q2 2015 were €29.2 billion, an increase of €5.9 billion, or 25% (+10% at constant exchange rates, or CER) from €23.3 billion for Q2 2014. Higher revenues in NAFTA (+40%; +16% CER), EMEA (+19%; +16% CER) and Components (+23%; +18% CER) were partly offset by decreases in LATAM (-15%; -13% CER) and Maserati (-17%; -29% CER).

Adjusted EBIT was €1,525 million, up €557 million (+58%; +30% CER) from Q2 2014 driven by strong performance in NAFTA and continued improvement in EMEA and Components, partially offset by lower results in LATAM and APAC. The year over year results reflect a positive translation impact from the strengthening U.S. Dollar.

NAFTA more than doubled its performance to €1,327 million (€595 million in Q2 2014) driven by higher volumes, improved net pricing and a positive translation impact, partly offset by increased industrial costs. NAFTA margin continued to improve from 4.9% in Q2 2014 to 7.7% in Q2 2015. For the six months ended June 30, 2015, NAFTA margin improved to 5.8% from 4.1% for the same period last year and is now within the 5.5% - 6.0% target set for the full year. 

Adjusted EBIT for LATAM decreased by €142 million to negative €79 million, reflecting lower volumes due to weak market conditions, costs for the start-up of the Pernambuco plant and costs for the Jeep Renegade commercial launch, partially offset by favorable net pricing. 

Excluding the costs of the Pernambuco start-up and Jeep Renegade launch, the LATAM results would have been break-even for the quarter. Adjusted EBIT for APAC was €47 million, a decrease of €63 million from Q2 2014 as a result of lower volumes and unfavorable net pricing, primarily due to challenging market conditions in China and foreign exchange effects from the Australian Dollar, partially offset by reduced marketing costs. 

EMEA's Adjusted EBIT was €57 million compared to break-even in Q2 2014 resulting from increased volumes and favorable mix, partially offset by the negative foreign currency transaction impact on vehicles imported from NAFTA.

Adjusted EBIT excludes net charges of €177 million for Q2 2015 compared to €7 million for Q2 2014. The net charges for Q2 2015 are primarily composed of an €80 million charge related to the adoption of the Venezuelan government's Marginal Currency System, or SIMADI exchange rate, due to the continuing deterioration of the economic conditions in Venezuela and an €81 million charge resulting from a consent order agreed with the U.S. National Highway Traffic Safety Administration (NHTSA).

Net financial expense totaled €627 million, €121 million higher than in Q2 2014, primarily reflecting a one-off charge of €51 million recognized in connection with the prepayment of the FCA US 2019 secured senior notes, unfavorable currency translation and higher debt levels in Brazil.

Tax expense totaled €388 million, compared to €258 million in Q2 2014, principally due to the increase in profit before taxes.

Net profit for the quarter was €333 million, compared to €197 million for Q2 2014. Profit attributable to owners of the parent was €320 million compared with €175 million for Q2 2014.

Adjusted net profit for the quarter was €450 million, compared with €204 million for Q2 2014.

Net industrial debt at June 30, 2015 was €8.0 billion, down from €8.6 billion at March 31, 2015. The €0.6 billion decrease primarily reflects positive cash flows from operating activities of €3.1 billion, partially offset by capital expenditures of €2.2 billion.

Total available liquidity was €25.4 billion at June 30, 2015, in line with March 31, 2015, with €0.7 billion of negative foreign exchange translation effects partially offsetting the positive cash flow for the period.

2015 Outlook

The Group revised upwards its full-year guidance:

• Worldwide shipments at ~4.8 million units (from 4.8 to 5.0 million unit range);
• Net revenues over €110 billion (from ~€108 billion);
• Adjusted EBIT equal to or in excess of €4.5 billion (from €4.1 to €4.5 billion range);
• Adjusted net profit in €1.0 to €1.2 billion range, with Adjusted basic EPS in €0.64 to €0.77 range (unchanged);
• Net industrial debt in €7.5 billion to €8.0 billion range (unchanged).

Figures do not include any impacts for the previously announced capital transactions regarding Ferrari.

Results by Segment

Three months ended June 30, 2015 and 2014

Six months ended June 30, 2015 and 2014

Shipments were 677 thousand vehicles (+8%) and sales¹ totaled 682 thousand vehicles (+5%). Market share was 12.4% in the U.S (up 30 bps from Q2 2014) and 15.0% in  Canada (down 30 bps).

Net revenues were €17.2 billion, up 40% (+16% CER) primarily due to volume growth for the all-new Jeep Renegade and the all-new Chrysler 200, positive net pricing and favorable foreign currency translation effects.

Adjusted EBIT of €1,327 million, which more than doubled compared with €595 million in Q2 2014, reflects higher volumes, positive net pricing, purchasing efficiencies and a positive translation impact, partially offset by higher base material costs for vehicle content enhancements. 

NAFTA margin continued to improve from 4.9% in Q2 2014 to 7.7%. For the six months ended June 2015, NAFTA margin improved to 5.8% from 4.1% for the same period last year and is now within the 5.5% - 6.0% target set for the full year. Adjusted EBIT for Q2 2015 excludes the charge of €81 million related to the consent order agreed with NHTSA.

__________________________

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

Shipments were 138 thousand vehicles, a decrease of 32% reflecting continued macroeconomic weakness resulting in poor trading conditions in the region's principal markets. Market share in Brazil was 19.0%, down 190 bps, due to strong competition and pricing pressures, however the Group remained the leader in the market for Q2 with a 360 bps lead over the nearest competitor. In Argentina, market share declined from 15.8% in Q2 2014 to 12.2% in Q2 2015 mainly due to continued import restrictions.

Net revenues were €1,851 million, down 15% (-13% CER) primarily due to reduced shipments.

Adjusted EBIT was negative €79 million in Q2 2015, down from €63 million in Q2 2014, reflecting lower volumes, increased start-up costs for the Pernambuco plant and marketing spending for the Jeep Renegade launch, partially offset by positive net pricing. 

Excluding the start-up costs for the Pernambuco plant and the commercial launch of the Jeep Renegade, LATAM results would have been at break-even for the quarter. Adjusted EBIT for Q2 2015 excludes the €80 million charge primarily resulting from the adoption of the SIMADI exchange rate due to the continuing deterioration of the economic conditions in Venezuela.

Shipments (excluding JVs) totaled 46 thousand vehicles, down 15%, primarily due to heightened competition in China. Group retail sales (including JVs) were 14 thousand vehicles lower than Q2 2014 at 55 thousand vehicles.

Net revenues were €1,523 million, consistent with Q2 2014, but 12% lower at CER, primarily as a result of a decrease in volumes.

Adjusted EBIT was €47 million, a decrease of €63 million driven by lower volumes, unfavorable net pricing, due to an increase in incentive levels in China and unfavorable foreign exchange transaction effects for vehicle sales in Australia partially offset by a reduction in marketing costs.

Passenger car and light commercial vehicle (LCV) shipments totaled 322 thousand units, up 13% over Q2 2014. Passenger car shipments were up 13% to 258 thousand units and LCVs were up 12% to 64 thousand units. 

European passenger car market share (EU28+EFTA) was up 30 bps to 6.4% (up 70 bps to 28.6% in Italy). For LCVs, European market share² (EU28+EFTA) was flat at 13.0% (up 60 bps to 45.1% in Italy).

Net revenues were €5,470 million (+19%; +16% CER) resulting from higher volumes and favorable

product mix driven by the all-new Fiat 500X and Jeep Renegade.

Adjusted EBIT for Q2 2015 was €57 million, compared with break-even results for the same quarter in 2014. The improvement was primarily attributable to increased shipments and more favorable product mix, reflecting the continued success of the Fiat 500 family and Jeep brand, specifically from the Fiat 500X and Jeep Renegade and cost efficiencies, which were partially offset by higher costs for U.S. imported vehicles due to a weaker Euro and increased marketing costs.

_____________________________

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

Net revenues were €766 million, reflecting an increase of €37 million (+5%) from Q2 2014, mainly driven by higher volumes and favorable product mix, partially offset by lower sales of engines to Maserati.

Adjusted EBIT of €124 million, compared with €105 million in Q2 2014, primarily reflects an increase in volumes, improved product mix and favorable foreign currency transaction effects.

Net revenues totaled €610 million, down 17% (-29% CER) from Q2 2014, primarily due to decreased volumes resulting from weaker demand in China and unfavorable product mix.

Adjusted EBIT decreased to €43 million from €61 million in Q2 2014 primarily due to lower volumes, unfavorable mix and net pricing, partially offset by a reduction in selling, general and administrative costs.

Magneti Marelli

Net revenues were €1,868 million, a 17% increase over Q2 2014, reflecting positive performance in the lighting, electronic systems and powertrain businesses.

Adjusted EBIT was €76 million, an increase of €21 million (+38%) from Q2 2014 primarily related to higher volumes and the benefit of cost containment actions and efficiencies, partially offset by start-up costs related to the Pernambuco plant.

Comau

Net revenues were €532 million, a 58% increase from Q2 2014, primarily due to body assembly (previously body welding) and robotics businesses.

Adjusted EBIT increased by €9 million from Q2 2014 to €20 million primarily due to increased volumes and favorable mix.

Teksid

Net revenues were €172 million, a 4% increase over Q2 2014, primarily attributable to an 18% increase in aluminum business volumes, offset by a 7% decrease in cast iron business volumes.

Adjusted EBIT was break-even, compared with negative €1 million in Q2 2014 primarily from increased volumes from the aluminum business and favorable foreign exchange rate effects.

Brand activity in the quarter

Giulia, the eagerly anticipated all-new model of Alfa Romeo with the legendary Quadrifoglio logo, was unveiled to the international press at the newly renovated Alfa Romeo Historic Museum ("La Macchina del Tempo") on June 24, the 105th anniversary date of the founding of Alfa Romeo in Milan, marking the start of a new chapter in the history of this legendary brand.

The new Fiat Aegea compact sedan with its significantly refined design combining comfort, spaciousness, efficiency and technology, was debuted at the 2015 Istanbul Motor Show on May 21. Sales are scheduled to commence in November 2015 in Turkey and continue in over forty countries across the EMEA region.

At the opening of Expo Milano 2015 on May 1, Fiat Chrysler Automobiles, as Official Global Partner with a fleet of 105 vehicles, together with its brands, welcomed all the visitors to the event with an outdoor campaign based on the universal language of flags composed of high impact maxi-boards, posters and video installations at the main entrances of the exhibition. 

The Company opened the FCA Store inside the Expo Pavilions and held a round table on the topic of "The Environment: driving change and innovation" on the occasion of the World Environment Day.

The all-new Chrysler 200 was named "Car of the Year" in April by the Rocky Mountain Automotive Press association while the all-new Chrysler 300C Platinum made Ward's prestigious "10 Best Interiors List" for 2015.

The all-new Jeep Renegade and the Fiat 500 were selected by Kelley Blue Book for its annual list of the "10 Coolest New Cars Under $18,000" in May.

Comau unveiled its powerful powertrain solutions, machine technology and first-class industrial robots at the 14th China International Machine Tool Show in April.

EBIT to Adjusted EBIT reconciliation  

Calculation of Adjusted Net profit

Calculation of Adjusted Basic EPS

*********