FIAT GROUP POSTED €1 BILLION TRADING PROFIT FOR Q2.







Published by Gerald Ferreira Date: July 31, 2012
Categories: Chrysler Financial, Fiat Finance

FIAT GROUP POSTED €1 BILLION TRADING PROFIT FOR Q2. ALL REGIONS CONTRIBUTING POSITIVELY WITH THE EXCEPTION OF EUROPE, WHERE LOSSES WERE REDUCED FROM Q1.

NET INDUSTRIAL DEBT REDUCED TO €5.4 BILLION

REVENUES TOTALED €21.5 BILLION, EBIT €1 BILLION AND NET PROFIT €358 MILLION. AVAILABLE LIQUIDITY FURTHER INCREASED TO €22.7 BILLION

  • Revenues reflect strong growth in NAFTA and APAC, a softening in LATAM, although the Brazilian market rebounded strongly in June and a decline in EMEA due to the continued deterioration in the European economy.
  • Trading profit was €1.0 billion on the back of continuing strong performance for Chrysler brands in NAFTA and APAC, with EMEA reducing trading loss by approximately €70 million over Q1. For LATAM, trading profit was in line with full-year expectations. Positive performance for Ferrari and Maserati up 16% year-over-year.
  • Worldwide shipments for mass-market car brands were in excess of 1.1 million units (in excess of 2.1 million year-to-date).
  • Net industrial debt was reduced to €5.4 billion (€5.8 billion at end Q1), with €0.6 billion positive cashflow from Chrysler more than offsetting negative cashflow of €0.2 billion for the rest of the Group.
  • Total available liquidity improved to €22.7 billion (€21.4 billion at end Q1), including €3.0 billion in undrawn credit lines.
  • Despite continued lack of visibility regarding trading conditions in Europe, the Group confirms full year guidance.

FIAT Group

Group revenues were €21.5 billion for the quarter. Excluding Chrysler, revenues totaled €9.2 billion, a 7.5% decrease over Q2 2011 mainly reflecting volume declines in Europe, where difficult trading conditions continued for both passenger cars and light commercial vehicles, particularly in Italy, as a result of the economic climate. Luxury and Performance brands increased revenues by 8.7% billion, mainly due to the weakness of the European car industry.

Trading profit for Q2 2012 was €1.0 billion. The NAFTA region reported trading profit of €717 million, LATAM €238 million and APAC €64 million, while EMEA recorded a loss of €138 million. Luxury and Performance brands and the Components businesses contributed €104 million and €47 million, respectively. Trading profit for Fiat excluding Chrysler was €144 million, compared to €375 million in Q2 2011, reflecting lower volumes in Europe and, to a lesser extent, Latin America, which were only partially compensated for by industrial efficiencies, cost containment actions and further realization of group synergies.

FIAT GROUP Highlights
H1 2012 H1 2011(1) Change (€ million) Q2 2012 Q2 2011(1) Change
2,121 1,259 862 Shipments (2): mass-market brands (000s) 1,102 739 363
41,745 22,363 19,382 Net revenues 21,524 13,153 8,371
1,876 776 1,100 Trading profit 1,010 525 485
1,890 1,882 8 EBIT (3) 995 1,591 -596
3,965 3,167 798 EBITDA (4) 2,036 2,326 -290
1,052 1,514 -462 Profit before taxes 532 1,361 -829
737 1,274 -537 Net Profit/(loss) 358 1,237 -879
793 193 600 Net Profit/(loss) ex-unusuals 425 156 269
0.170 1.104 - EPS (€) 0.084 1.080 -
5,435 5,529(6) -94 Net industrial debt 5,435 5,772(5) -337

(1) Includes Chrysler from 1 June 2011

(2) New cars and LCVs invoiced to external customers (i.e., dealer network, importers and other customers such as rental companies, corporate fleets, government agencies and local authorities, etc.) (3) Trading profit plus result from investments and unusuals (4) EBIT plus Depreciation and Amortization (5) At 31 March 2012 (6) At 31 December 2011

EBIT was €995 million (€102 million excluding Chrysler). For mass-market brands by region on a pro-forma basis EBIT was as follows: NAFTA increased by 80% to €744 million, driven by strong volume growth; LATAM was €238 million, down from €352 million in Q2 2011, due to lower volumes, price pressure and currency translation impacts; APAC more than tripled to €60 million, with improvements in both volumes and margins. EMEA reported a €184 million loss, down from €406 million a year earlier. This year includes €91 million in unusuals represented by the write-down of the investment in the SevelNord JV following the agreement with PSA whereas Q2 2011 included €372 million of unusuals due to product portfolio rationalization following the acquisition of control of Chrysler. Excluding unusuals, the loss was €93 million in Q2 2012 compared to €34 million in Q2 2011.

Net financial expense totaled €463 million. Excluding Chrysler, net financial expense was €256 million, compared to €160 million in Q2 2011, reflecting higher debt levels (with a €9 million loss from the mark-to-market value of the Fiat stock option-related equity swaps, compared to zero in Q2 2011).

Profit before taxes was €532 million. Excluding Chrysler, there was a loss of €154 million, compared to a profit of €1,504 million in Q2 2011. Net of unusuals, the loss was €60 million, compared to a profit of €223 million in Q2 2011; the €283 million difference reflects a €187 million reduction in EBIT ex-unusuals and a €96 million increase in net financial expense.

Income taxes totaled €174 million. Excluding Chrysler, income taxes were €92 million and related primarily to the taxable income of companies operating outside Italy and employment-related taxes in Italy.

Net profit was €358 million for the quarter (€103 million after minorities). Excluding Chrysler, there was a €246 million loss as compared to a €1,380 million profit for Q2 2011; excluding unusual charges, loss was €152 million in Q2 2012 compared to €76 million profit in Q2 2011.

Net industrial debt at 30 June 2012 was €5.4 billion, a reduction of more than €0.3 billion for the quarter. In Q2, Chrysler generated €0.6 billion in cash, after investing approximately €1 billion in capital expenditure. Excluding Chrysler, net industrial debt was €4.1 billion, with the €0.2 billion increase equally attributable to cash absorbed by operations, including €0.7 billion capex, and non-cash items. Capital expenditure for the Group totaled €1.7 billion.

Total available liquidity, inclusive of undrawn committed credit lines (€3.0 billion, unchanged over end Q1 net of currency translation impacts), improved to €22.7 billion (€21.4 billion at end Q1), of which €12.1 billion related to Fiat excluding Chrysler and €10.6 billion to Chrysler. At the beginning of July, a €600 million bond was issued under the GMTN Program, completing full coverage of bond maturities for 2012 and one-third for 2013.

First Half

Group revenues were €41.7 billion for the period. Excluding Chrysler, revenues totaled €17.9 billion, a 6.6% decrease over H1 2011 mainly reflecting volume declines in Europe. Luxury and Performance brands increased revenues by 10% to €1.4 billion, driven by growth in Asia and North America. Components were down 1.6% to €4.0 billion.

Trading profit for H1 2012 was €1,876 million. Trading profit for Fiat excluding Chrysler was €138 million, compared to €626 million in H1 2011. For Luxury and Performance brands, trading profit increased 15.1% to €175 million, while Components reported a 19.4% decrease to €83 million.

EBIT was €1,890 million. Excluding Chrysler, EBIT was €114 million. For mass-market brands by region on a pro-forma basis: NAFTA EBIT increased by 80% to €1,425 million, driven by strong volume growth; for LATAM, EBIT was €473 million, down from €658 million in H1 2011; APAC nearly tripled to €145 million, with both volume and margin improvements. EMEA reported a €354 million loss, which includes €90 million of unusuals due to the write-down of the Sevel Nord JV, compared to a loss of €472 million in H1 2011 which included unusuals of €373 million due to the product portfolio rationalization following the acquisition of the control of Chrysler. Excluding unusuals, the loss was €264 million in H1 2012 compared to €99 million in H1 2011.

Net financial expense totaled €838 million. Excluding Chrysler, net financial expense was €422 million, compared to €298 million, reflecting higher debt levels with a marginal positive impact from the mark-to-market of the Fiat stock option-related equity swaps.

Profit before taxes was €1,052 million. Excluding Chrysler, there was a €308 million loss compared to €1,657 million profit in H1 2011. Net of unusuals, the loss was €214 million in H1 2012 as compared to a profit of €376 million; the €590 million reduction over H1 2011 reflects a €466 million decrease in EBIT and higher net financial expense.

Income taxes totaled €315 million. Excluding Chrysler, income taxes were €211 million and related primarily to the taxable income of companies operating outside Italy and employment-related taxes in Italy.

Net profit was €737 million for the first half (€207 million after minorities). Excluding Chrysler, there was a €519 million loss as compared to a €1,417 million profit for H1 2011; excluding unusuals, the loss was €425 million in H1 2012 compared to a €113 million profit in H1 2011.

Net industrial debt at 30 June 2012 was €5.4 billion, compared to €5.5 billion at year-end 2011. Chrysler improved net industrial debt by €1.7 billion, more than offsetting absorption for the rest of the Group of €1.6 billion (of which €1.4 billion in Q1). Total capital expenditure for the Group was €3.2 billion, of which €1.3 billion related to Fiat excluding Chrysler, in line with H1 2011.

FIAT GROUP - Income Statement (2nd Quarter)

Q2 2012 Q2 2011
(€ million) Fiat as reported Chrysler Fiat ex Chrysler (A) Fiat as reported Fiat ex Chrysler (B) Change (A vs B)
Net revenues 21,524 13,093 9,240 13,153 9,990 -7.5%
Trading profit 1,010 866 144 525 375 -231
EBIT (1) 995 893 102 1,591 1,664 -1,562
EBITDA (2) 2,036 1,420 616 2,326 2,223 -1,607
Profit before taxes 532 686 (154) 1,361 1,504 -1,658
Profit/(loss) 358 604 (246) 1,237 1,380 -1,626
Profit/(loss) ex-unusuals 425 577 (152) 156 76 -228

(1) Trading profit plus result from investments and unusuals (2) EBIT plus Depreciation and Amortization

FIAT GROUP - Income Statement (1st Half)

H1 2012 H1 2011
(€ million) Fiat as reported Chrysler Fiat ex Chrysler (A) Fiat as reported Fiat ex Chrysler (B) Change (A vs B)
Net revenues 41,745 25,573 17,925 22,363 19,200 -6.6%
Trading profit 1,876 1,738 138 776 626 -488
EBIT (1) 1,890 1,776 114 1,882 1,955 -1,841
EBITDA (2) 3,965 2,799 1,166 3,167 3,064 -1,898
Profit before taxes 1,052 1,360 (308) 1,514 1,657 -1,965
Profit/(loss) 737 1,256 (519) 1,274 1,417 -1,936
Profit/(loss) ex-unusuals 793 1,218 (425) 193 113 -538

(1) Trading profit plus result from investments and unusuals (2) EBIT plus Depreciation and Amortization

FIAT GROUP

Net Debt and Available Liquidity

30.06.2012 31.03.2012 31.12.2011
(€ million) Fiat as reported Chrysler Fiat ex-Chrysler Fiat as reported Chrysler Fiat ex-Chrysler Fiat as reported Chrysler Fiat ex-Chrysler
Cash Maturities (Principal) (27,099) (10,535) (16,564) (26,463) (10,008) (16,455) (25,331) (10,301) (15,030)
Bank Debt (8,062) (2,832) (5,230) (7,699) (2,705) (4,994) (7,587) (2,757) (4,830)
Capital Market (1) (12,654) (2,542) (10,112) (12,570) (2,396) (10,174) (11,409) (2,473) (8,936)
Other Debt (2) (6,383) (5,161) (1,222) (6,194) (4,907) (1,287) (6,335) (5,071) (1,264)
Asset-backed financing (3) (465) - (465) (459) (16) (443) (710) (31) (679)
Accruals and other adjustments (4) (941) (413) (528) (863) (340) (523) (710) (195) (515)
Gross Debt (28,505) (10,948) (17,557) (27,785) (10,364) (17,421) (26,751) (10,527) (16,224)
Cash & Marketable Securities 19,765 9,591 10,174 18,505 8,428 10,077 17,725 7,420 10,305
Derivatives Assets/(Liabilities) 165 6 159 311 10 301 128 27 101
Net Debt (8,575) (1,351) (7,224) (8,969) (1,926) (7,043) (8,898) (3,080) (5,818)
Industrial Activities (5,435) (1,351) (4,084) (5,772) (1,926) (3,846) (5,529) (3,080) (2,449)
Financial Services (3,140) - (3,140) (3,197) - (3,197) (3,369) - (3,369)
Undrawn committed credit lines 2,983 1,033 1,950 2,923 973 1,950 2,955 1,005 1,950
Total available liquidity 22,748 10,624 12,124 21,428 9,401 12,027 20,680 8,425 12,255

(1) Includes bonds and other securities issued in the financial markets. (2) Includes VEBA Notes, HCT Notes, IFRIC 4 and other non bank financing. (3) Advances on sale of receivable and securitization on book. (4) 30 June 2012 Includes: adjustments for hedge accounting on financial payables for -€127 million (-€120 million as of 31 March 2012, -€166 million as of 31 December 2011), current financial receivables from jointly controlled financial service companies of €39 million (€23 million as of 31 March 2012, €21 million as of 31 December 2011) and (accrued)/unearned net financial charges for an amount of €853 million (-€766 million as of 31 March 2012, -€565 million as of 31 December 2011).

Results by segment

Second quarter

FIAT GROUP Revenues and EBIT by segment – 2nd Quarter

Revenues EBIT (1)
2012 2011 Change (€ million) 2012 2011 Change
10,979 2,886 8,093 NAFTA(mass-market brands) 744 108 636
2,624 2,687 -63 LATAM(mass-market brands) 238 319 -81
763 226 537 APAC(mass-market brands) 60 10 50
4,920 5,243 -323 EMEA(mass-market brands) (184) (429) 245
778 716 62 Luxury and Performance Brands (Ferrari, Maserati) 104 90 14
2,022 2,126 -104 Components(Magneti Marelli, Teksid, Comau) 47 (246) 293
263 276 -13 Other (12) (42) 30
(825) (1,007) 182 Eliminations and adj. (2) 1,781(2) -1,783
21,524 13,153 8,371 Total 995 1,591 -596

(1) Trading profit plus result from investments and unusuals. (2) Includes €2,017 million unusual income from measurement of the stake in Chrysler upon acquisition of control, net of the related €220 million recognition of Chrysler's inventories step-up.

FIAT GROUP Revenues and EBIT by segment – 2nd Quarter 2012 vs. 2nd Quarter 2011 pro-forma

Revenues EBIT (2)
2012 2011 pro-forma (1) Change (€ million) 2012 2011 pro-forma (1) Change
10,979 8,357 2,622 NAFTA(mass-market brands) 744 414 330
2,624 2,910 -286 LATAM(mass-market brands) 238 352 -114
763 408 355 APAC(mass-market brands) 60 19 41
4,920 5,467 -547 EMEA(mass-market brands) (184) (406) 222
778 716 62 Luxury and Performance Brands (Ferrari, Maserati) 104 90 14
2,022 2,126 -104 Components(Magneti Marelli, Teksid, Comau) 47 (246) 293
263 276 -13 Other (12) (42) 30
(825) (1,088) 263 Eliminations and adj. (2) 1,783(3) -1,785
21,524 19,172 2,352 Total 995 1,964 -969

(1) Pro-forma calculated by including Chrysler results as if consolidated from 1 January 2011. (2) Trading profit plus result from investments and unusuals. (3) Includes €2,017 million unusual income from measurement of the stake in Chrysler upon acquisition of control, net of the related €220 million recognition of Chrysler's inventories step-up.

First half

FIAT GROUP Revenues and EBIT by segment - 1st Half

Revenues EBIT (1)
2012 2011 Change (€ million) 2012 2011 Change
21,354 2,896 18,458 NAFTA(mass-market brands) 1,425 108 1,317
5,211 4,960 251 LATAM(mass-market brands) 473 604 -131
1,477 334 1,143 APAC(mass-market brands) 145 (2) 147
9,428 10,166 -738 EMEA(mass-market brands) (354) (516) 162
1,438 1,308 130 Luxury and Performance Brands (Ferrari, Maserati) 175 152 23
4,037 4,101 -64 Components(Magneti Marelli, Teksid, Comau) 83 (210) 293
480 524 -44 Other (48) (48) -
(1,680) (1,926) 246 Eliminations and adj. (9) 1,794(2) -1,803
41,745 22,363 19,382 Total 1,890 1,882 8

(1) Trading profit plus result from investments and unusuals. (2) Includes €2,017 million unusual income from measurement of the stake in Chrysler upon acquisition of control, net of the related €220 million recognition of Chrysler's inventories step-up.

FIAT GROUP Revenues and EBIT by segment - 1st Half 2012 vs. 1st Half 2011 pro-forma

Revenues EBIT (2)
2012 2011 pro-forma (1) Change (€ million) 2012 2011 pro-forma (1) Change
21,354 16,866 4,488 NAFTA(mass-market brands) 1,425 791 634
5,211 5,466 -255 LATAM(mass-market brands) 473 658 -185
1,477 907 570 APAC(mass-market brands) 145 54 91
9,428 10,653 -1,225 EMEA(mass-market brands) (354) (472) 118
1,438 1,308 130 Luxury and Performance Brands (Ferrari, Maserati) 175 152 23
4,037 4,101 -64 Components(Magneti Marelli, Teksid, Comau) 83 (210) 293
480 524 -44 Other (48) (48) -
(1,680) (2,072) 392 Eliminations and adj. (9) 1,795(3) -1,804
41,745 37,753 3,992 Total 1,890 2,720 -830

(1) Pro-forma calculated by including Chrysler results as if consolidated from 1 January 2011. (2) Trading profit plus result from investments and unusuals. (3) Includes €2,017 million unusual income from measurement of the stake in Chrysler upon acquisition of control, net of the related €220 million recognition of Chrysler's inventories step-up.

MASS-MARKET BRANDS

NAFTA

Second Quarter

NAFTA 2nd Quarter
(€ million) 2012 2011 Change 2011 pro-forma (1) Change
Net revenues 10,979 2,886 8,093 8,357 2,622
Trading profit 717 110 607 412 305
EBIT (2) 744 108 636 414 330
Shipments (000s) 549 157 392 460 89

(1) Pro-forma calculated by including Chrysler results as if consolidated from 1 January 2011. (2) Trading profit plus result from investments and unusuals.

Vehicle shipments in NAFTA totaled 549,000 units for Q2 2012, representing a 19% increase over Q2 2011. In the U.S., vehicle shipments were 446,000 (up 23% over Q2 2011), in Canada 74,000 (up 0.3%). Shipments for Mexico and other were 29,000 (up 26%).

Vehicle sales1in the NAFTA region totaled 532,000 for the quarter, an increase of 20% over Q2 2011. In the U.S., sales growth continued to outpace the market, with a 24% increase to 436,000 units, closing the quarter with 27 consecutive months of year-over-year gains. In Canada, sales increased 4% to 75,000 vehicles and in Mexico sales were up 12% to 21,000 vehicles.

The U.S. vehicle market finished Q2 2012 up 16% to 3.9 million vehicles. Group share was up 0.6 percentage points over the prior year to 11.2%. Jeep vehicle sales totaled 127,000 for the quarter, up 22% year-over-year, with the Wrangler (+35%, and setting an all-time monthly record in June) and the Grand Cherokee (+33%) models leading the increases. Dodge, the Group's number one selling brand in the U.S., posted vehicle sales of 135,000 for Q2 2012, up 7% from the prior year mainly driven by the Avenger (+67%) and the Journey (+44%). The Ram truck brand posted a sales increase of 14% to 73,000 vehicles, reflecting gains across the Ram pickup range (light-duty, heavy-duty and cab-chassis). Chrysler brand sales totaled 89,000 vehicles for Q2 2012, an increase of 66% over the prior year with strong performance from the Chrysler 300 (+151%) and 200 (+66%).

The Canadian vehicle market grew 6% year-over-year to 513,000 vehicles. Total market share was 14.5% in the quarter. Key performers included the Chrysler 200 and 300, and the Ram Pickup.

Fiat 500 sales in the U.S. and Canada totaled 15,000 vehicles for the quarter, compared to 7,000 vehicles in Q2 2011.

The NAFTA region reported revenues of €11 billion, up 31.4% (+17% in USD terms) over the prior year on a pro-forma basis on the back of higher volumes.

Trading profit for Q2 2012 was €717 million up 74% over the prior year (on a pro-forma basis), with volume increases and positive net pricing only partially offset by higher industrial costs, including product content enhancements. EBIT was €744 million, reflecting the strong trading profit performance for the period.

The Dodge Dart is arriving in dealerships and is starting to accumulate awards, including being named to Kelley Blue Book's kbb.com and Consumer Guide Automotive's 10 Coolest Cars Under $18,000, as was the Fiat 500. The Dart was also honored as the Compact Car of Texas by the Texas Auto Writers Association and was included in Ward's 10 Best Interiors for 2012, along with the Chrysler 300 Luxury Series. The AutoPacific Vehicle Satisfaction Awards named the 2012 Jeep Grand Cherokee Best-in-Class for Vehicle Satisfaction – Premium Mid-Size SUV.

First Half

NAFTA 1st Half
(€ million) 2012 2011 Change 2011 pro-forma (1) Change
Net revenues 21,354 2,896 18,458 16,866 4,488
Trading profit 1,387 110 1,277 795 592
EBIT (2) 1,425 108 1,317 791 634
Shipments (000s) 1,068 158 910 908 160

(1) Pro-forma calculated by including Chrysler results as if consolidated from 1 January 2011. (2) Trading profit plus result from investments and unusuals.

Vehicle shipments in NAFTA totaled 1,068,000 units for H1 2012, representing an 18% increase over H1 2011. In the U.S., vehicle shipments were 864,000 (up 21% over H1 2011), in Canada 149,000 (up 6%). Shipments for Mexico and other were 55,000 (up 9%).

Vehicle sales in the NAFTA region totaled 1,007,000 for the period, an increase of 26% over H1 2011. Sales increased 30% in the U.S. to 834,000. In Canada, sales increased 7% to 131,000 vehicles, and vehicle sales in Mexico were 42,000.

The U.S. vehicle market in H1 2012 was up 15% to 7.4 million vehicles. Overall market share was 11.2% in H1 2012, compared to 9.9% in H1 2011. Jeep vehicle sales totaled 241,000 for the period, up 28% year-over-year. Dodge posted vehicle sales of 261,000 for H1 2012, an increase of 15%. The Ram brand posted a sales increase of 17% to 143,000 vehicles. Chrysler brand sales totaled 168,000 vehicles for H1 2012, up 75% over the prior year.

The Canadian vehicle market grew 8% year-over-year to 884,000 vehicles. Total market share was 14.7%, substantially in line with H1 2011.

Fiat 500 sales in the U.S. and Canada totaled 26,000 cars for H1 2012 compared to 8,000 vehicles in H1 2011.

The NAFTA region reported revenues of €21.4 billion, up 26.6% (+17% in USD terms) over the prior year on a pro-forma basis on the back of higher volumes.

Trading profit for H1 2012 was €1,387 million up 74.5% over the prior year, on a pro-forma basis. EBIT was €1,425 million, reflecting the strong trading profit performance for the period.

LATAM

Second Quarter

LATAM 2nd Quarter
(€ million) 2012 2011 Change 2011 pro-forma (1) Change
Net revenues 2,624 2,687 -63 2,910 -286
Trading profit 238 344 -106 377 -139
EBIT (2) 238 319 -81 352 -114
Shipments (000s) 226 236 -10 244 -18

(1) Pro-forma calculated by including Chrysler results as if consolidated from 1 January 2011. (2) Trading profit plus result from investments and unusuals.

In Q2 2012, shipments totaled 226,000 units, 7.4% lower than the prior year (on a pro-forma basis), but with a rebound in Brazilian volumes around the end of May in response to economic stimuli introduced by the government.

In Brazil, the passenger car and light commercial vehicle market stood at 860,000 units, in line with Q2 2011 level. On May 21st, a new IPI tax regime was announced, including, among other measures, a temporary reduction in vehicle sales tax. The market reacted very positively with a jump in average daily sales, arriving at around 17,000 units in the month of June (up 36.6% over May). Additionally, at the beginning of July, Brazil's central bank cut the interbank lending rate a further 50 bps to 8.0%, which is expected to stimulate economic growth during the second half of the year.

The Group confirmed its leadership of the Brazilian market, with an overall share of 22.1%, down 0.6 percentage points over Q2 2011 and 1.6 percentage points above the nearest competitor. The Group's best-selling products continued to perform well, driven by the continuing success of the new Uno and Palio. Fiat held a 29.3% share of the A and B segments combined.

In Q2 2012, the Group shipped a total of 194,000 passenger cars and light commercial vehicles in Brazil, representing a 5.1% decline over Q2 2011 (on a pro-forma basis). Shipments of Chrysler brand vehicles increased 89% in Brazil to 2,071 units for the quarter, driven by Jeep brand (+121%) led by Jeep Liberty, Grand Cherokee and Compass.

In Argentina, where the market was down 1.4% to 199,000 units, Fiat sales decreased 1.3% to 22,000 units. Market share was in line with Q2 2011 at 11.2%. Shipments in Argentina were approximately 20,000 units, down 20.3% over the prior year on a pro-forma basis. The reduction in shipments was attributable to a decline in market demand and realignment of dealer inventories.

In other LATAM markets, shipments totaled approximately 12,000 units (-22.4% versus Q2 2011).

The LATAM region reported revenues of €2,624 million, 9.8% lower than Q2 2011 (on a pro-forma basis). At constant exchange rates, revenues decreased by 5.6% reflecting the volume trend.

The region reported a trading profit of €238 million, compared to €377 million for Q2 2011 (on a pro-forma basis). The €139 million reduction (~€120 million at constant exchange rates) was mainly attributable to lower volumes, continued pricing pressure and increased advertising spend for new product launches.EBIT was aligned to trading profit for the quarter and was €114 million lower than Q2 2011, which included €25 million in unusual charges.

In Q2, Fiat launched the new Palio Weekend and Strada, and a significantly refreshed Siena EL. The Palio and Siena together accounted for 8.4% of Fiat sales, while the Strada continued in its 12th year as the highest selling small pickup.

First Half

LATAM 1st Half
(€ million) 2012 2011 Change 2011 pro-forma (1) Change
Net revenues 5,211 4,960 251 5,466 -255
Trading profit 473 629 -156 683 -210
EBIT (2) 473 604 -131 658 -185
Shipments (000s) 441 438 3 457 -16

(1) Pro-forma calculated by including Chrysler results as if consolidated from 1 January 2011. (2) Trading profit plus result from investments and unusuals.

In H1 2012, shipments in the LATAM region totaled 441,000 units, 3.5% lower than the prior year (on a pro-forma basis).

In Brazil, the passenger car and light commercial vehicle market was in line with the same period a year ago at 1,632,000 units. The Group confirmed its leadership of the Brazilian market, with an overall share of 22.4%, in line with H1 2011. Fiat models held a 30.1% share of the A and B segments combined.

In H1 2012, the Group shipped a total of 371,000 passenger cars and light commercial vehicles in Brazil, representing a 3.7% decline over H1 2011 (on a pro-forma basis). Shipments of Chrysler brands more than doubled to 4,000 units.

In Argentina, where the market was up 4.3% to 441,500 units, the Group sold approximately 52,000 units. Share for the period was up 0.6 percentage points over the prior year to 11.7%. Shipments decreased by 3.1% (on a pro-forma basis) to 45,000 vehicles.

In other LATAM countries, approximately 24,000 units were shipped (-3.7% over H1 2011).

The LATAM region reported revenues of €5.2 billion, 4.7% lower than H1 2011 (on a pro-forma basis), mainly reflecting the volume trend.

Trading profit was €473 million for the period, compared to €683 million for H1 2011 (on a pro-forma basis). EBIT was in line with trading profit for the period. EBIT for H1 2011 was €658 million (on a pro-forma basis), and included €25 million in unusual charges.

APAC

Second Quarter

APAC 2nd Quarter
(€ million) 2012 2011 Change 2011 pro-forma (1) Change
Net revenues 763 226 537 408 355
Trading profit 64 15 49 24 40
EBIT (2) 60 10 50 19 41
Shipments (000s) 26 8 23 15 11

(1) Pro-forma calculated by including Chrysler results as if consolidated from 1 January 2011. (2) Trading profit plus result from investments and unusuals.

Vehicle shipments in the region totaled approximately 26,000 units for Q2 2012, up 73% from a year ago (on a pro-forma basis).

Demand was up over the prior year in most of the Group's key markets (i.e., India, China, Japan, Australia), but contracted slightly in South Korea.

Group retail sales, including JVs, totaled 26,000 units for Q2 2012, up 24% over a year ago and outperforming the market (+20%), driven by strong performance in China (+24%), Australia (+62%) and South Korea (+54%). The Jeep brand accounted for 70% of APAC sales, more than doubling volumes over Q2 2011. New releases during the quarter included the all-new Chrysler 300C and the SRT8 and Overland Summit versions of the Jeep Grand Cherokee, with the Chrysler Grand Voyager to follow in Q4 2012.

The start of production of the Fiat Viaggio was announced by the Fiat-GAC JV in China. The Viaggio, the JV's first locally-produced C-class sedan, is due in dealerships in the third quarter.

During the quarter, a new company was established that will take over commercial and distribution activities for the Fiat brand in India that were previously operated through a JV with Tata. The JV will continue to manage the Group's industrial activities in the country.

Revenues in the APAC region were €763 million, up 87% compared to Q2 2011 on a pro-forma basis (€408 million), primarily driven by performance for Chrysler Group brands.

Trading profit was €64 million, nearly triple the prior year (€24 million in Q2 2011 on a pro-forma basis) benefiting primarily from volume growth, partially offset by an increase in selling expenses in support of regional development. EBIT, which also reflects the contribution from joint ventures, was €60 million for the quarter, more than tripling compared to €19 million in Q2 2011.

First Half

APAC 1st Half
(€ million) 2012 2011 Change 2011 pro-forma (1) Change
Net revenues 1,477 334 1,143 907 570
Trading profit 141 9 132 65 76
EBIT (2) 145 (2) 147 54 91
Shipments (000s) 51 11 45 32 19

(1) Pro-forma calculated by including Chrysler results as if consolidated from 1 January 2011. (2) Trading profit plus result from investments and unusuals.

Vehicle shipments in the region totaled approximately 51,000 units for the first half, up 59% over a year ago (on a pro-forma basis).

Group retail sales, including JVs, totaled 53,000 units for the period, up 26% over H1 2011 and outperforming the industry (+15%), driven by strong performance in China (+26%), Australia (+55%) and South Korea (+35%).

Revenues in APAC totaled €1,477 million, up 63% over H1 2011 (€907 million on a pro-forma basis).

Trading profit was €141 million, more than double the €65 million in H1 2011 (pro-forma), benefiting primarily from volume growth. EBIT, which also reflects the contribution from joint ventures, was €145 million for the first half, nearly triple the prior year number.

EMEA

Second Quarter

EMEA 2nd Quarter
(€ million) 2012 2011 Change 2011 pro-forma (1) Change
Net revenues 4,920 5,243 -323 5,467 -547
Trading profit (138) (87) -51 (65) -73
EBIT (2) (184) (429) 245 (406) 222
Shipments (000s) 301 338 -37 346 -45

(1) Pro-forma calculated by including Chrysler results as if consolidated from 1 January 2011. (2) Trading profit plus result from investments and unusuals.

Shipments2 of passenger cars and LCVs totaled 301,000 in the EMEA region for the quarter, a decrease of circa 45,000 units (-13%) over Q2 2011 (on a pro-forma basis).

Passenger car shipments totaled 246,000, down 11.1% over the prior year, while LCV shipments totaled 55,000, representing a 20.2% decline. For passenger cars, the decrease reflects contractions in Italy, France and Germany, while for LCVs the reduction was principally attributable to lower demand in Italy.

In Europe (EU27+EFTA), the passenger car market was down 5.4% overall to 3.5 million vehicles, with performance uneven across markets. The overall trend for the quarter was substantially attributable to the decline in demand in Italy (-18.6%) – which, for the full year, is heading towards the lowest level since 1979 – France (-6.3%) and Spain (-13.8%). Demand was up over the prior year in the UK (+4.8%), Netherlands (+11.4%) and Switzerland (+12.5%) and flat in Germany.

Fiat and Chrysler brands recorded a 6.8% combined European market share for the second quarter, a 0.6 percentage point decline over Q2 2011, but a 0.5 percentage point increase over the first quarter of 2012 (which was impacted by car hauler strikes in Italy). The decline over Q2 2011 was almost entirely attributable to unfavorable market mix, with Italy's weighting in the European total market down about 2 percentage points. In Italy, Fiat and Chrysler brands increased share 1.2 percentage points to 31.2% for the quarter. The gain was driven by positive performance in the A segment and the C segment, where the Giulietta took the top slot for the first time. In the I segment, the Freemont ranked in the top 5 for the fourth consecutive quarter. By major market, share was higher in Spain (+0.4 percentage points), unchanged in the UK and down 0.4 percentage points in both Germany and France.

For passenger cars, shipments were up in the UK (+1,000 units or 6.8%) and essentially flat in Spain, but down in Italy (-12,600 units or -8.9%, better than the market trend as a result of the partial recovery from the car hauler strikes), France (-6,500 units or -29.7%) and Germany (-6,200 units or -25.4%).

The European light commercial vehicle market (EU27+EFTA) registered a 10.7% contraction over Q2 2011 to 425,000 units. Performance for this segment was also heavily affected by the drop in demand in Italy (-33.0%).

Fiat Professional closed the quarter with a 13.6% share3 of the European LCV market, a 0.9 percentage point decline over Q2 2011 that was almost entirely attributable to the unfavorable market mix. Excluding Italy, market share was 10.8% for the quarter, representing a 0.1 percentage point year-over-year increase. In Italy market share was 44.3%, compared to 45.5% in Q2 2011, which benefited significantly from fleet renewal activity. Of particular note during the quarter was the Fiat Ducato, which led its segment for the first time with approximately 35,000 units sold, making it the best-selling LCV in Europe.

In Europe, the Group shipped a total of 51,000 LCVs during the quarter, a decrease of 21.6% over Q2 2011. The overall reduction was primarily attributable to declines in Italy and France, with the other major European markets substantially unchanged over Q2 2011.

EMEA closed the second quarter with revenues of €4,920 million, down 10% over the same period in 2011 on a pro-forma basis, mainly reflecting volume declines.

Trading result was a loss of €138 million for the quarter compared to a €65 million loss for Q2 2011 (on a pro-forma basis), with negative volume and price effects only partially offset by industrial efficiencies, enhanced synergies in group purchasing and WCM, and the benefits of cost containment actions. EBIT was also negative at €184 million including unusual charges of €91 million due to the write-down of the investment in the SevelNord JV following the agreement with PSA, and represented an improvement compared to the Q2 2011 loss of €406 million on a pro-forma basis, which included unusual charges of €372 million due to the rationalization of the product portfolio following the acquisition of control in Chrysler. The result from investments contributing positively for €45 million, improved from €31 million in Q2 2011.

During the quarter, Fiat continued pre-launch promotion of the 500L. The official presentation took place at the beginning of July.

In June, the Lancia brand presented the new Flavia, an eye-catching, roomy 4-seat convertible, to the international press.

In the quarter Fiat Professional began accepting orders for the new Doblò XL whose interior volume, the largest in the class, benefits from the vehicle's long wheel-base and high roof.

First Half

EMEA 1st Half
(€ million) 2012 2011 Change 2011 pro-forma (1) Change
Net revenues 9,428 10,166 -738 10,653 -1,225
Trading profit (345) (216) -129 (171) -174
EBIT (2) (354) (516) 162 (472) 118
Shipments (000s) 561 652 -91 666 -105

(1) Pro-forma calculated by including Chrysler results as if consolidated from 1 January 2011. (2) Trading profit plus result from investments and unusuals.

A total of 561,000 passenger cars and LCVs were shipped in EMEA during the first half, a decrease of 105,000 units (-15.8%) over H1 2011 (on a pro-forma basis).

Passenger car shipments totaled 458,000, down 14.8% over the first six months of 2011, while LCV shipments totaled 103,000 units, a decrease of 19.6% year-over-year. In both segments, the reduction was primarily attributable to performance in Italy and France.

For the first half of 2012, the European passenger car market was down 6.3% overall to 6.9 million vehicles, with the most significant declines in demand recorded in Italy (-19.7%), France (-14.4%) and Spain (-8.2%).

Fiat and Chrysler brands recorded a 6.6% combined European market share for the first half, a 0.8 percentage point year-over-year decline primarily attributable to the unfavorable market mix. In Italy, market share was in line with H1 2011 at 29.5%.

The Group shipped a total of 458,000 passenger cars, down 14.8% over the first half of 2011, with decreases registered in most major European markets with the exception of the UK, where shipments were up 1.0%.

The European light commercial vehicle market registered a 9.9% decline for the first half, with performance heavily influenced by sharp contractions in Italy (-34.7%) and Spain (-25.2%).

Fiat Professional closed the first half with an overall European market share of 12.4%. The 1.2 percentage point decline over the first half of 2011 reflected the unfavorable market mix and a reduction in the level of fleet renewal activity compared to the first half of 2011.

In Europe, the Group shipped a total of 96,000 LCVs during the first half, a 20.9% decrease over the same period in 2011. That reduction, which was in line with the market, was almost entirely attributable to results in Italy and France.

EMEA closed the first half with revenues of €9,428 million, down 11.5% over the same period in 2011 on a pro-forma basis, mainly reflecting volume declines.

Trading result was a €345 million loss for the first half (negative €171 million in H1 2011 on a pro-forma basis). EBIT was also negative at €354 million with unusual charges of €90 million (negative €472 million for H1 2011, on a pro-forma basis including unusual charges of €373 million), with the result from investments positively contributing €81 million (€72 million positive in H1 2011).

LUXURY AND PERFORMANCE BRANDS

Ferrari

During Q2 2012, Ferrari shipped a total of 1,931 street cars, representing a 4% increase over Q2 2011. The growth was primarily driven by sales of 12-cylinder models, which were 58% up over the prior year on the back of the contribution from the new FF.

North America remained Ferrari's no. 1 market with shipments of street cars up 13.6% over the prior year to 509 vehicles. In EMEA, volumes were substantially in line with Q2 2011, with a total of 966 cars shipped. Performance in the UK, Germany and Switzerland offset the significant decline in Italy. In Asia Pacific, shipments were higher in China, Hong Kong and Taiwan (+14.6% to 244) and Japan (+39% to 96), more than offsetting the reduction registered in Australia. In other markets, performance was substantially in line with Q2 2011.

For the second quarter of 2012, Ferrari reported €652 million in revenues, a 10.7% increase over the same period in 2011 driven primarily by higher volumes.

Ferrari closed the quarter with a trading profit and EBIT of €92 million (€82 million for Q2 2011). The 12.2% increase was attributable to higher volumes, as well as good results from the personalization program and licensing activities.

In April, Ferrari debuted the new version of the California, the California 30, which is 30 kilos lighter than its predecessor and 30 hp more powerful.

At the 2012 Beijing Auto Show, the marque presented the latest evolution of the Hy-Kers system, a hybrid solution that will be adopted on future models.

During the first half, a total of 3,664 street cars were shipped, representing a 7.4% increase over H1 2011. The growth was primarily driven by 12-cylinder models (+66% over H1 2011). North America maintained its position as Ferrari's primary market with 961 street cars shipped during the first half, accounting for 26.2% of the total (+14% vs. 2011). Volumes were also higher in China, Hong Kong and Taiwan where a total of 398 vehicles were shipped (+9.6% vs. 2011), accounting for 11% of global sales.

First half revenues totaled €1,208 million, an 11.9% gain over the same period in 2011.

Ferrari achieved trading profit and EBIT of €152 million for the first half, up €17 million over the €135 million recorded for the first half of 2011.

Maserati

  • A total of 1,762 cars were shipped during the quarter, up approximately 1% over Q2 2011, with significant increases in the U.S. (+23%), China (+20%) and the Middle East (+83%), but a 40% decline in Europe.
  • Maserati posted revenues of €171 million for the quarter, up approximately 2% over the same period in 2011.
  • The quarter closed with trading profit and EBIT of €11 million, an increase of €2 million over Q2 2011.
  • At the 2012 Beijing Auto Show in April, Maserati gave the Asian premier of the Kubang, a concept vehicle on which the brand's new crossover model will be based.
  • A total of 3,322 vehicles were shipped in the first half, representing a 3.4% increase over H1 2011.
  • Maserati reported first half revenues of €324 million, up approximately 7% over the €303 million posted for the same period in 2011.
  • Trading profit totaled €23 million, representing an increase over the €18 million profit posted for H1 2011.

COMPONENTS AND PRODUCTION SYSTEMS

Magneti Marelli

During the second quarter of 2012, Magneti Marelli's activities were influenced by difficult trading conditions in the European car market, further accentuated by the contraction in the LCV segment. Outside Europe, there was a positive trend in NAFTA and China, while volumes in Brazil were down.

Most business lines recorded revenue decreases with the exception of Lighting (revenues up 8%) – which benefited from strong demand from German customers and new technological content for products launched during the second half of 2011 – and Electronic Systems (+17%) where the increase in sales of telematic and body products to external customers compensated for a contraction in captive volumes.

Magneti Marelli's second quarter revenues totaled €1,467 million, a 4.7% decline over the prior year (-3.6% at constant exchange rates).

Trading profit was €37 million for the quarter, compared to €50 million for Q2 2011. The decrease was attributable to lower sales volumes, partially offset by cost containment measures and efficiency gains. EBIT was a positive €38 million for the quarter, compared to a loss of €114 million for Q2 2011 which included unusual charges for €153 million (EBIT ex-unusuals was a positive €39 million).

For the first half, Magneti Marelli reported revenues of €2,918 million, a 3.6% decrease over the same period in 2011. Performance by business line was largely in line with the second quarter trend.

Trading profit was €66 million for H1 2012, compared with €84 million for the same period in 2011. EBIT was €66 million for the first half (-€83 million for H1 2011, positive €70 million ex-unusuals).

Teksid

The sector posted revenues of €204 million for the second quarter, an 18.1% decline over the same period in 2011, with lower volumes for both the Cast Iron (-19.3%) and Aluminum business units (-16.5%).

Trading profit was €3 million, compared to €11 million for the same period in 2011. EBIT was €4 million compared to negative of €6 million for Q2 2011 which included unusual charges for €18 million.

For the first half, revenues were €427 million, a 10.3% decline over H1 2011.

Trading profit was €6 million for the first half, compared to €14 million for the same period in 2011. EBIT was €8 million compared to negative €2 million for H1 2011, including unusual charges for €18 million.

Comau

Revenues were €365 million for second quarter, a 2.5% increase over the previous year, which was mainly attributable to the Powertrain Systems operations.

Order intake for the period was €300 million, representing a 4% increase over Q2 2011. At 30 June 2012, the order backlog totaled €982 million, a 17% increase over year-end 2011, primarily attributable to the Powertrain Systems and Body Welding activities.

Trading profit totaled €7 million for the quarter, compared to €3 million for Q2 2011. EBIT was positive for €6 million as compared to a negative €126 million in Q2 2011, which included unusual charges of €129 million.

For the first half, revenues came in at €722 million, a 14.1% year-over-year increase.

Comau closed the first half with trading profit of €11 million, compared to €4 million for the corresponding period in 2011. EBIT was positive €10 million as compared to a negative of €125 million for H1 2011, which included unusual charges of €129 million.

Significant events

  • On April 4th, Fiat S.p.A. shareholders approved the 2011 Financial Statements and a gross dividend of €0.217 per preference and savings share. Shareholders also elected the 2012-2014 Boards of Directors and Statutory Auditors and renewed authorization for share buy-backs up to €1.2 billion, including the €259 million in own shares already held.
  • On April 25th, Chrysler notified Ally Financial, Inc. ("Ally") of its election not to renew its current "Auto Finance Operating Agreement" following the April 30, 2013 expiration. Chrysler is in discussions with Ally and other financial institutions regarding various options to meet the financing needs of Chrysler Group dealers and customers.
  • On April 27th, Standard & Poor's lowered its rating on Fiat S.p.A.'s long-term debt from "BB" to "BB-" with stable outlook. The short-term rating was confirmed at "B".
  • On May 2nd, Fiat and Tata agreed that management control of Fiat's commercial and distribution activities in India would be handed over to a separate Fiat Group company to enable greater focus on development of the Fiat brand. The new network will be developed progressively and the existing Fiat-franchised Tata dealers will be encouraged to form the foundation of the network.
  • On May 21st, the Company completed the mandatory conversion of all preference and savings shares into Fiat ordinary shares pursuant to the shareholder resolution of April 4, 2012. As a result of the conversion, Company share capital increased to €4,476,441,927.34, consisting of 1,250,402,773 shares with a par value of €3.58 each.
  • On May 23rd, Fiat Group Automobiles S.p.A. (FGA) and Mazda Motor Corporation (Mazda) signed a non-binding Memorandum of Understanding 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, with production of the Alfa Romeo model beginning in 2015.
  • On June 28th, a ceremony was held at the Fiat-GAC plant in Changsha, China, to celebrate completion of the new factory and rollout of the Fiat Viaggio, the first Fiat model produced in China by the JV.
  • On July 3rd, Fiat notified VEBA (the Voluntary Employee Beneficiary Association) of its intention to exercise the option to purchase a portion of VEBA's ownership interest in Chrysler. That tranche represents approximately 3.3% of Chrysler's outstanding equity. Following completion of the purchase, Fiat will hold 61.86% of Chrysler's outstanding equity.
  • On July 16th, Fiat issued a €600 million bond (fixed coupon 7.75% due October 2016). The notes - issued by Fiat Finance and Trade Ltd. S.A., a wholly-owned Group subsidiary, and guaranteed by Fiat S.p.A. under the GMTN Program - have been rated Ba3 by Moody's, BB- by Standard & Poor's and BB by Fitch.
  • On July 25th, the Fiat plant in Pomigliano D'Arco has been awarded the prestigious international "Automotive Lean Production 2012" award in the OEM category, following an analysis and evaluation process by a committee of experts selected by the German magazine, "Automobil Produktion", and by a consultancy firm. Since 2006, over 700 production plants in more than 15 different countries, including Germany, France, Spain, Benelux and Italy, have taken part in the selection process to win the soughtafter trophy, which is one of the most significant on a European scale.
  • On July 26th, FGA and PSA Peugeot Citroën entered into an agreement providing for the transfer of FGA's shareholding in the SevelNord joint venture to PSA Peugeot Citroën on or before December 31, 2012 at a symbolic value. SevelNord will continue to produce light commercial vehicles for the two groups until Euro6 emissions standards come into effect at the end of 2016. The agreement does not impact on other co-operations between FGA and PSA Peugeot Citroën, including the Sevel joint-venture located in Val di Sangro, Italy, that will continue as per current contracts.

2012 Outlook

Fiat remains fully committed to the strategic direction laid out in the 5-year plans that were outlined in November 2009 for Chrysler and April 2010 for Fiat.

Having reviewed economic and trading conditions in the Group's four operating regions, Fiat confirms the expectations of performance in North America, Latin America and Asia-Pacific.

Events of the past 12 months have cast doubt on the volume assumptions governing the overall market and the Group's own development plans for Europe up to the end of 2014. The level of uncertainty regarding economic activity in the Euro zone for the foreseeable future has made specific projections of financial performance unreliable. As a result, the Group has provided guidance for 2012 in terms of ranges, from continuing depressed trading conditions in Europe to a gradual stabilization at the end of 2012.

As a consequence, Fiat's 2012 full year guidance is as follows:

  • Revenues in excess of €77 billion;
  • Trading profit between €3.8 to €4.5 billion;
  • Net profit between €1.2 to €1.5 billion;
  • Net industrial debt between €5.5 to €6.0 billion.

The Group expects to articulate the effect of the Euro zone economic climate on its 2014 plan when releasing Q3 2012 results.

While working on achievement of its financial targets, Fiat will continue its strategy of targeted alliances to optimize capital commitments and reduce risks.