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FCA Q2 2020 result

Discussion in 'Mopar / FCA News' started by T_690, Jul 31, 2020 at 7:27 AM.

  1. T_690

    T_690 Well-Known Member

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    The successful and safe restart of production in the closing weeks of
    May, together with cost control actions, yielded positive results for
    North America, with an Adjusted EBIT of €39 million. U.S. consumer
    demand exceeded expectations and FCA improved U.S. retail market
    share in the quarter. In addition, Dodge became the first domestic
    brand ever to achieve a number 1 ranking in the annual J.D. Power
    Initial Quality Study.

    In LATAM, FCA led the industry in vehicle sales for the first time, finishing
    the quarter with a market-leading share of 15.9 percent. Driving the
    performance was the Brazil market where the Group reached an
    industry-leading market share of 19.8 percent, amid strong consumer
    demand for the Group's pickup trucks and SUVs. The all-new Fiat
    Strada had its commercial launch at the end of June and is showing
    strong demand.

    The EMEA region’s manufacturing facilities steadily came back online
    during the quarter. As the consumer market continues to recover,
    much of the Group's focus has shifted to the highly anticipated
    electrified vehicle introductions of the Made in Europe Jeep
    Renegade and Compass “4xe” PHEVs with production started in the
    quarter, as well as the all-new full electric Fiat 500 to start, in the third
    quarter.

    During the quarter, Maserati teased the introduction of the new Ghibli
    Hybrid with select images in anticipation of the vehicle’s worldwide
    debut in July. To further demonstrate its commitment to invest and
    elevate the iconic brand, Maserati confirmed that “Maserati Day” will
    be held Sept. 9-10 in Modena (Italy), where the brand will debut the
    new Maserati MC20 super sports car and other future products.

    To further strengthen our financial position and enhance flexibility, we
    secured additional liquidity with the signing of a three-year, €6.3 billion
    credit facility with Intesa Sanpaolo, Italy’s largest banking group. The
    proceeds of this facility will be dedicated exclusively to FCA’s activities
    in Italy and to support the more than 10,000 small and medium
    enterprises that make up the Italian automotive sector. On May 13,
    both PSA and FCA announced the decision to not distribute an
    ordinary dividend in 2020 related to financial year 2019, in light of the
    impact from the COVID-19 crisis. In July, the Group confirmed pricing
    of €3.5 billion of notes issued under its Medium Term Note Programme.

    The COVID-19 crisis has further underlined the compelling logic of the
    Groupe PSA and FCA merger. Work by both teams towards the
    completion of the merger has continued apace and we expect to
    meet the objective of combining as a single company by the end of
    the first quarter of 2021. Antitrust approvals have already been
    granted by twelve of twenty-two jurisdictions. The review initiated by
    the European Commission is not expected to delay the merger
    timetable. FCA and PSA also took another major step earlier this
    month with the announcement that the new entity formed by the
    combined companies will be known as Stellantis.
     
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  2. MJAB

    MJAB Well-Known Member

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    Lets add some more informations to the media release and correct some omissions.

    - Euro 6.3 billion credit facility with Intesa Sanpaolo: it is italian state backed (about Euro 5 billion) credit line, that allows FCA to save a considerable ammount of millions on interests.
    - Part of the sum can be used to pay suppliers outside Italy.
    - One of the condition of the italian state backed credit lines was to not distribute dividends in 2019 (same was made by other eurropean countries).
     
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  3. hmk123

    Level III Supporter

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    When I arrived in the U.S. one friend here told me: next best thing to having money in this country is having good credit. But one has to be careful with that advice. :)
     
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  4. aldo90731

    Staff Member Level III Supporter

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    Yup. Credit and debt are two sides of the same coin.
     
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  5. T_690

    T_690 Well-Known Member

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  6. KrisW

    KrisW Well-Known Member

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    Couple of points from that...

    1. It's good to see autonomy being targeted at freight vehicles. This where EVs and L4 autonomy could really change a market.
    2. I think that's the first official confirmation of Jeep Wagoneer as a BoF, and Warren as site of production?
    3. Toluca looks like it'll get the Compass MCA before Europe does.
     
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  7. T_690

    T_690 Well-Known Member

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    @KrisW

    AFAIK Europe is already prepared for Compass MCA. Let's say they didn't want to risk with launching European production with MCA. They played it safe.
     
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  8. T_690

    T_690 Well-Known Member

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    Mike Manley:

    Now our teams have worked tirelessly to create an environment that can keep everyone safe and our employees have done their part by following the new protocols and our suppliers have worked hard to support our plans. We've also fully resumed our product development activities in each region, as we continue to invest in programs, as part of our plans to enhance our product portfolio. And as a result our full year 2020 CapEx spending is expected to be between €8 billion and €8.5 billion.

    Now some of you may remember that as we came into this year, we had a CapEx expectation of around €9.5 billion. So we will have reduced that by around €1.5 billion, but not jeopardize the launch of important white space products in North America or our electrified product in EMEA. And talking of EMEA, we'll be launching five new high-voltage EVs, four of which are made in Europe and I'm going to give you further details on these launches later.

    Now for the Jeep brand, we'll start production of some new high-volume, high-margin products next year, a new three-row full-size SUV in Q1, the all-new Wagoneer and Grand Wagoneer in Q2. And, as you know, all three of these vehicles will go into high-margin segments that we do not play in today. And then, of course, the next-generation Grand Cherokee around Q3.

    While the disruption in demand and local restrictions in all regions impacted our sales, our commercial teams were able to deliver several bright spots during the quarter. For the first time ever, we achieved market leadership in LATAM, with 15.9% market share, up 190 basis points year-over-year and we also maintained our leadership position in Brazil with 19.8% market share, up 100 basis points. And in the U.S., our retailer retail market share was up 10 basis points to 12.5%, primarily driven by the Jeep brand, especially with Wrangler and Grand Cherokee and, of course, our Ram heavy duty pickup.

    Now, given the unprecedented nature of the pandemic, we took quick actions to safeguard our earnings power, preserve cash and strengthen our financial flexibility, which included a new €3.5 billion bridge credit facility which was syndicated in April and remained undrawn at the end of June.

    And then, this facility was replaced in July with the issuance of a new €3.5 billion term notes, and a new innovative €6.3 billion credit facility that we signed in June with Intesa Sanpaolo, which is fully dedicated to our operations in Italy and to support the restart and transformation for more than 10,000 small and medium enterprises that are a critical part of Italy's automotive sector.

    Our industrial free cash outflows were €4.9 billion in the quarter, which was better than our previous expectations. And as a result of the significant liquidity actions we completed during the quarter, our available liquidity remained strong at €17.5 billion which by the way excludes €4.5 billion that remains undrawn under the new €6.3 billion Italian facility.

    Warren Truck will be down for 14 weeks from late June, until early October for retooling to facilitate the production of the all-new Wagoneer and Grand Wagoneer. And Toluca was down for the month of July to get ready for the Jeep Compass mid-cycle refresh.

    However, we have several key new product actions that will provide momentum in the second half. Starting with the all new Fiat Strada, Brazil's best-selling pickup truck now for almost two decades, where production essentially began in May as part of our plant restart and I'm happy to report that demand for the new truck has been very strong.

    And we also have several other key vehicle launches occurring throughout the remainder of the year. We'll begin production of the all-new Ram TRX pickup truck at our Sterling Heights plant beginning in Q4. And lastly, Maserati will benefit from several new models, which all go into production this quarter.

    Mid-cycle freshenings of the Ghibli Quattroporte and Levante, along with the new Ghibli Mild Hybrid the first Maserati model to adopt hybrid electric propulsion combining high-performance low emissions and Maserati fun to drive. And the new Ghibli Trofeo, which is the first offering with a V8 engine. We expect the launch of these vehicles and numerous other actions, the new leadership team has and continues to take to have a solid impact on their financial performance in the fourth quarter.

    Now we're looking forward to the much anticipated Maserati day that will take place in September. The event will set out the future of the brand introducing exciting new products innovation plans and customization programs and we'll start with a supercharger reveal of the new MC20 super sports car and the new 100% Maserati powertrain.
     
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  9. T_690

    T_690 Well-Known Member

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    John Murphy

    Good afternoon guys. I just had two quick follow-up questions. First, just on the regulatory credit question. I mean, Mike, you said that you would be regulatory compliance and I apologize you seem to miss the timeframe in your commentary. When do you think that would be -- does that mean both in North America and Europe? And is that under the umbrella of Stellantis or before you get there? I'm just trying to understand timing when these regulatory credit purchases hopefully go to zero?

    Mike Manley

    John, different timeline depending on the -- depending on the region and these were as standalone FCA. So obviously when the merger closes, this will change and probably be accelerated. But the anticipation was that as we get into 2023 in the U.S. We will basically be zero reliance on credit. Our electrified fleet will carry all of the burden of compliance.

    And then in Europe, because of the focus that we have put in terms of electrification, by the time we get to the end of 2021 as we enter 2022, we expect the fleet to be able to keep us fully compliant in EMEA as well. And that is with what I think is a very reasonable forecast to take rates of both our plug-in hybrids and our battery electric offerings.
     

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