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Sergio’s commentary

by David Zatz on
Sent to employees yesterday, under the salutation, “Dear Colleagues” —

We’ve closed the book on 2016 and I’m pleased to tell you that today FCA is reporting record results for the year. Our full-year adjusted EBIT was €6.1 billion, up 26%, with all segments profitable and improving year-over-year. With a solid fourth quarter performance, we achieved a net profit of €1.8 billion for 2016, far exceeding the €93 million total the prior year. Our adjusted net profit increased 47% to €2.5 billion and our net industrial debt now stands at €4.6 billion, which represents almost a half billion euro improvement from year-end 2015.

These results affirm that your hard work and your commitment to working together across borders are building a solid, sustainable future. Based on our 2016 numbers, we have issued 2017 guidance that confirms our conviction in achieving our ambitious 2018 targets.

Our positive results were driven by continued strong performance in NAFTA and improvements in EMEA and all other segments. NAFTA margins increased to 7.4% compared with 6.4% in 2015. Maserati’s margins more than doubled, reaching 9.7% for the year and 12% in the second half of 2016. In EMEA, adjusted EBIT was up 157% to €540 million as the Region posted growth in market share, revenues and margin.

Despite continued weakness in the key Brazilian market, a better product mix and cost efficiencies enabled us to realize adjusted EBIT of €5 million in LATAM, reversing the  prior year’s loss of €87 million. In APAC, adjusted EBIT grew by 114% to €105 million on the strength of favorable vehicle mix and improved results from our Chinese joint venture. Our Components segment came in with a 13% increase in adjusted EBIT for the year, to €445 million, with margin rising from 4% to 4.6%.

FCA had some significant news on the product front during the just-completed fourth quarter. At the Los Angeles Auto Show, we unveiled the Stelvio, Alfa Romeo’s first-ever SUV, and we also introduced in the North American market the all-new Jeep Compass.

In December, the Windsor Assembly Plant in Canada began production of the all-new Chrysler Pacifica Hybrid, the most fuel-efficient minivan ever with a U.S. EPA rating of 84 miles-per-gallon equivalent. The same month, FCA and Google announced the completion of 100 Pacific Hybrid vehicles specifically built to enable fully self-driving operations.

Our vehicles racked up many awards during the fourth quarter, and the Pacifica minivan got us off to a great start in 2017, winning the prestigious North American Utility Vehicle of the Year award as voted on by key automotive journalists in the U.S. and Canada. This recognition demonstrates that we can compete with the absolute best in the world.

Before closing, I want to address complaints made by the EPA in the U.S. and the Ministry of Transport in Germany that FCA has used illegal devices to meet diesel emissions regulations in those countries. These accusations are unfair and totally undeserved. I can assure you that we will vigorously defend ourselves and our products. We cannot and we will not allow anyone to question the ethics of our organization. We have built FCA on values that include honesty and integrity. These values have guided us in the good as well as in the difficult times and they are the best guarantee for our future.

Along the road there will always be critics and accusations. We have been there before and, as we know from experience, it is the most difficult, most bitter moments that make us stronger. Our collective response to adversity creates bonds that bring us together and form our character, pushing us to prove our value and integrity. Let’s move forward continuing to embrace the values that have carried us this far.
Sergio Marchionne

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