Financial review - Operating performance

Operating Performance
 20122011(*)
(€ million)
Fiat
with
Chrysler
ChryslerFiat
excluding
Chrysler
Fiat
with
Chrysler
ChryslerFiat
excluding
Chrysler
Net revenues
83,957 51,202 35,566 59,559 23,609 37,382
Cost of sales
71,474 43,187 31,098 50,704 20,003 32,133
Selling, general and administrative
6,731 3,732 2,999 5.047 1,866 3,181
Research and development
1,835 798 1,037 1,367 385 982
Other income/(expense)
(103) (26) (77) (49) (10) (39)
TRADING PROFIT/(LOSS)
3,814 3,459 355 2,392 1,345 1,047
Result from investments
107 (3) 110 131 1 130
Gains/(losses) on disposal of investments
(91)  -  (91) 21  -  21
Restructuring costs
15 (48) 63 102 (7) 109
Other unusual income/(expense) 
(138) (31) (107) 1,025 (152) 1,177
EBIT  3,677 3,473 204 3,467 1,201 2,266
Financial income/(expense)
(1,641) (816) (825) (1,282) (486) (796)
PROFIT/(LOSS) BEFORE TAXES
2,036 2,657 (621) 2,185 715 1,470
Income taxes
625 205 420 534 70 464
PROFIT/(LOSS) 
1,411 2,452 (1,041) 1,651 645 1,006
(*) Includes Chrysler from 1 June 2011.

Revenues

For 2012, Group revenues totaled approximately €84 billion, increasing 12% over the prior year on a proforma1 basis (+8% at constant exchange rates). Strong year-over-year increases were reported in NAFTA (+29% or 19% at constant exchange rates) and APAC (+50%). LATAM remained strong, while EMEA declined 11% on the back of a continued deterioration in European demand, particularly in Italy. Luxury and Performance brands posted a 7% increase in revenues to €2.9 billion, mainly driven by growth in North America and Asia Pacific. For Components, revenues were substantially in line with 2011 at €8.0 billion.

1 Includes Chrysler results as if consolidated from 1 January 2011

Trading profit

Trading profit totaled €3,814 million, a year-over-year increase of 18% on a pro-forma basis (+11% at constant exchange rates). For the NAFTA region, trading profit improved by €1 billion to €2,693 million, driven by strong volume growth, positive pricing and favorable currency translation. LATAM performed to expectations, posting €1,063 million of trading profit maintaining double-digit trading margin despite a 25% decrease compared to the prior year, which principally stemmed from cost inflation, pricing pressure and unfavorable currency translation impacts, only partially offset by higher volumes and efficiency gains. APAC reported €260 million, nearly double the prior year. EMEA recorded a loss of €704 million, with cost containment actions only partially mitigating the impact of reduced volumes and pricing pressures. Growth for Luxury and Performance brands continued, with trading profit improving €40 million to €392 million. Components contributed €176 million.

Income from investments

Income from investments totaled €107 million down from €131 million for 2011. The figure primarily relates to the Group’s share of the profit or loss of investees recognized using the equity method (€94 million in 2012 vs. €146 million in 2011). The item consisted of the following: investments in EMEA €160 million (€160 million in 2011); investment in RCS MediaGroup -€68 million (-€2 million in 2011); investments in the Components sector €2 million (-€15 million in 2011); other €13 million (-€12million in 2011).

Net losses on the disposal of investments

Net losses on the disposal of investments totaled €91 million (net gains of €21 million in 2011) and related to the write-down of the investment in the SevelNord joint venture.

Restructuring costs

Restructuring costs totaled €15 million for 2012 and mainly consisted of costs recognized for the EMEA region (€43 million), the Components sector (€7 million) and other companies (€13 million), net of the reversal of €48 million in restructuring charges previously recognized for the NAFTA region.

Other unusual expense

Other unusual expense totaled €138 million and primarily included provisions for disputes related to activities terminated in prior years and costs related to the resolution of the SevelNord JV and to the rationalization of relationships with certain suppliers. In 2011, the Group reported other unusual income (net) of €1,025 million. Unusual income totaled €2,100 million, of which €2,017 million related to the fair value re-measurement of the 30% ownership interest held in Chrysler prior to the acquisition of control and of the right to receive an additional 5% ownership interest following achievement by Chrysler of the third Performance Event (which occurred in early January 2012). Unusual expense totaled €1,075 million, of which €855 million excluding Chrysler was largely attributable to the impact on Fiat’s businesses of the strategic realignment with Chrysler’s manufacturing and commercial activities, and to one-off charges mainly related to the realignment of certain minor activities of the Group.

EBIT

EBIT was €3,677 million. Net of unusual items, there was a year-over-year increase of 17% on a pro-forma basis. For mass-market brands, EBIT by region was as follows: NAFTA €2,741 million, LATAM €1,032 million, and APAC €255 million. EMEA reported a €738 million loss (€544 million net of unusual items), compared with an €897 million loss in 2011 (€353 million net of unusual items).

Net financial expense

Net financial expense totaled €1,641 million. Excluding Chrysler, net financial expense was €825 million, compared with €796 million for 2011. Net of the impact of the mark-to-market of the Fiat stock option-related equity swaps (a €34 million gain for 2012 and €108 million loss for 2011), net financial expense increased by €171 million, mainly reflecting higher net debt levels.

Profit before taxes

Profit before taxes was €2,036 million. Excluding Chrysler, there was a loss of €621 million, compared with a profit of €1,470 million in 2011. Net of unusual items, the loss was €360 million, compared with a profit of €381 million in 2011; the €741 million reduction reflects a €692 million decrease in trading profit and a €29 million increase in net financial expense.

Income taxes

Income taxes totaled €625 million. Excluding Chrysler, income taxes were €420 million and related primarily to the taxable income of companies operating outside Europe and employment-related taxes in Italy.

Net profit

Net profit was €1,411 million. Excluding Chrysler, there was a net loss of €1,041 million, compared with a €1,006 million profit for 2011; excluding unusual items, the loss totaled €780 million compared with a €106 million loss for 2011.

Profit attributable to owners of the parent

Profit attributable to owners of the parent amounted to €348 million (€1,334 million in 2011).

The components of EBIT by segment were as follows:

 Trading profit/(loss)
Result from investments
Unusual income/(expense)
EBIT
(€ million)
2012  2011(*)   2012  2011(*)  2012  2011(*)
2012  2011(*) 
NAFTA  2,693 1,008  -  4 48 75 2,741 1,087
LATAM  1,063 1,356  -   -  (31) (25) 1,032 1,331
APAC  260 88 (5) (25)  -   -  255 63
EMEA  (704) (557) 160 160 (194) (544) (738) (941)
Luxury and Performance Brands
392 352  -   -   -  6 392 358
Components and Production Systems
176 217 2 (15) (11) (312) 167 (110)
Other 
(85) (74) (52) 5 (12) (39) (149) (108)
Eliminations and adjustments 
19 2 2 2 (44)  1,783(1)   (23) 1,787
Total Fiat Group 
3,814 2,392 107 131 (244) 944 3,677 3,467
(*) Includes Chrysler from 1 June 2011. (1) Includes €2,017 million unusual income from measurement of the stake in Chrysler upon acquisition of control, net of the related revaluation of Chrysler’s inventories of €220 million which was recognized in the income statement in June.

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