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05 Feb 2020

FCA: 2019 Full Year and Fourth Quarter Results

FCA: 2019 Full Year and Fourth Quarter Results

 

FCA reports strong full year 2019 results, with Net profit from continuing operations of €2.7 billion, Adjusted net profit of €4.3 billion, Adjusted EBIT of €6.7 billion and 6.2% margin, with record North America results and margin. Industrial free cash flows at €2.1 billion.

 

“Last year was a historic year for FCA. We continued to deliver value for our shareholders and we took actions to thrive in the future by substantially strengthening our financial position, committing to key product investments and entering into a combination agreement with PSA.” - Mike Manley, CEO

 

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  • Worldwide combined shipments 7 of 4,418 thousand units, down 9%, primarily due to dealer stock reduction in North America, lower China JV shipments along with sales channel actions and discontinuation of products in EMEA
  • Record North America results, with Adjusted EBIT of €6.7 billion, margin at 9.1%, up 50 bps; LATAM strong despite challenging market conditions in Argentina, with Adjusted EBIT of €0.5 billion and margin at 5.9%; substantial improvement in APAC
  • Industrial free cash flows of €2.1 billion; with capex at €8.4 billion

 

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During 2019, FCA delivered on its commitment to continued shareholder value generation as record North America and improved Latin America results led to strong Group performance, with Adjusted EBIT margin reaching 6.2 percent.
The Ram and Jeep brands drove North American results as strong sales of the all-new Ram Heavy-Duty, Ram 1500 and Ram 1500 Classic resulted in record Ram brand sales in the U.S., up 18%. The successful launch of the all-new Jeep Gladiator, which was recently named the 2020 North American Truck of the Year, was also a key factor in delivering record results in North America. In Latin America, positive performance in Brazil more than offset headwinds from weak market conditions in Argentina and other countries in the region. Strong operating performance drove Industrial free cash flows of €2.1 billion.

In addition to continued strong performance, the Group reinstated shareholder remuneration with thecommencement of an ordinary annual dividend and the payment of an extraordinary dividend upon completing the sale of Magneti Marelli in Q2 2019.


FCA also took numerous actions during the year to lay the groundwork for continued value creation. In Q1, we committed investments to expand production capacity in Michigan for the next generation Jeep Grand Cherokee, all-new Jeep Wagoneer and Grand Wagoneer and an allnew three-row full-size Jeep SUV. In Q2, we executed partnership agreements with Enel X and ENGIE Group to develop e-mobility solutions for electrified vehicles in Europe. In Q3, we announced plans to renew, expand and electrify the Maserati product portfolio. In Q4, we entered into an agreement to sell the Group’s cast iron automotive components business operated through our
subsidiary, Teksid S.p.A.

 

Finally, FCA and Groupe PSA agreed to a 50/50 merger that will create a leading global mobility company. The merger, which is expected to close at the end of 2020 or early 2021, is expected to generate approximately €3.7 billion of annual synergies at run-rate.
FCA expects continued strong performance in 2020 and confirms guidance:

  • Adjusted EBIT >€7.0 billion
  • Adjusted diluted EPS >€2.80
  • Industrial free cash flows >€2.0 billion

 

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  • Shipments down 9%, primarily due to dealer stock discipline, partially offset by volumes of all-new Jeep Gladiator and higher Ram 1500 shipments
  • Net revenues flat, with favorable model mix and foreign exchange translation effects, offset by lower volumes and negative channel mix
  • Record Adjusted EBIT, up 7%, with record margin, due to favorable model mix, positive net price, industrial efficiencies, lower advertising costs and favorable foreign exchange effects, partially offset by lower volumes and increased product costs on new vehicles

 

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  • Combined shipments down 29%, primarily from lower China JV volumes
  • Consolidated shipments down 10%, with increased Jeep Wrangler volumes more than offset by lower volumes of other vehicles, primarily Jeep Compass and Alfa Romeo Stelvio
  • Net revenues up 4%, with favorable vehicle mix, positive net pricing due to reduced incentives, partially offset by lower volumes
  • Significant improvement in Adjusted EBIT due to increased Net revenues, as well as lower industrial costs, partially offset by lower China JV results

 

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  • Combined and consolidated shipments down 8% and 9%, respectively, primarily due to sales channel actions and discontinued products
  • Net revenues down 10%, primarily due to lower volumes
  • Adjusted EBIT down, with lower volumes, higher incentives, compliance and product costs, partially offset by reduced advertising costs and labor efficiencies resulting from restructuring actions, as well as favorable model and channel mix

 

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  • Shipments flat, with increased volumes in Brazil offset by lower volumes in other markets, primarily Argentina due to continued market decline
  • Net revenues up 4%, with positive net pricing, including recognition of Brazilian indirect tax credits, partially offset by negative foreign exchange effects
  • Adjusted EBIT up 40%, due to higher Net revenues and industrial efficiencies, partially offset by purchasing cost inflation, higher import and export duties, as well as negative foreign exchange effect

 

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  • Shipments down 45%, primarily due to lower sales and planned dealer stock reduction
  • Net revenues down 40%, primarily due to lower volumes
  • Adjusted EBIT down primarily due to lower Net revenues, adjustments of residual values in the U.S during the second quarter and higher incentives related to accelerated transition to China 6, partially offset by favorable model and market mix

 

Reconciliations

 

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(*) Other activities, unallocated items and eliminations

A. Impairment expense primarily as a result of rationalized product portfolio plans for Europe in A-segment, as well as for Alfa Romeo
B. Restructuring costs primarily related to LATAM and North America
C. Credits recognized related to indirect taxes in Brazil

 

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D. Reflects results of Magneti Marelli up to the completion of the sale transaction on May 2, 2019, and the year ended December 31, 2018
E. Reflects tax impact on adjustments excluded from Adjusted EBIT noted above