Industrial Activities and Financial Services – Results for 2012

Industrial Activities and Financial Services – Results for 2012

The following tables provide a breakdown of the consolidated statements of income, financial position and cash flows between “Industrial Activities” and “Financial Services”. Financial Services includes companies that provide retail and dealer finance, leasing and rental services in LATAM, APAC, and EMEA and for Ferrari worldwide.

Financial Services also includes FGA Capital (the joint venture between Fiat Group Automobiles and Crédit Agricole), which is accounted for under the equity method.

Basis of analysis

The segmentation between Industrial Activities and Financial Services represents a sub-consolidation prepared on the basis of the core activities of each Group company.

Investments held by companies belonging to one segment in companies included in the other segment are accounted for under the equity method. To provide a more meaningful presentation of net profit, the results of investments accounted for in this manner are classified in the income statement under Result from intersegment investments.

The holding companies (Fiat S.p.A., Fiat Gestione Partecipazioni S.p.A., Fiat North America LLC and Fiat Partecipazioni S.p.A.) are classified under Industrial Activities.

The sub-consolidation of Industrial Activities also includes companies that provide centralized treasury services for Fiat excluding Chrysler (i.e., raising funds in the market and financing Group companies, with the exception of Chrysler Group LLC and its subsidiaries). Those activities do not, however, include offering financing to third parties.

N.B.: All Chrysler Group activities are included under Industrial Activities and Chrysler Group’s treasury activities (including funding and cash management) are managed separately from the rest of Fiat Group.

Operating Performance by Activity

 20122011
(€ million)
Consolidated
Industrial
Activities
Financial
Services
Consolidated
Industrial
Activities
Financial
Services
Net revenues
83,957 83,660 394 59,559 59,297 358
Cost of sales
71,474 71,300 271 50,704 50,545 255
Selling, general and administrative
6,731 6,687 44 5,047 5,009 38
Research and development
1,835 1,835 - 1,367 1,367 -
Other income/(expense)
(103) (114) 11 (49) (56) 7
TRADING PROFIT/(LOSS)
3,8143,724902,3922,32072
Result from investments (*) 107 24 83 131 54 77
Gains/(losses) on disposal of investments
(91)(91)-2121-
Restructuring costs
15 15 - 102 102 -
Other unusual income/(expense)
(138) (138) - 1,025 1,026 (1)
EBIT 3.677 3,504 173 3,467 3,319 148
Financial income/(expense)
(1,641) (1,641) - (1,282) (1,282) -
PROFIT/(LOSS) BEFORE TAXES
2,036 1,863 173 2,185 2,037 148
Income taxes
625 596 29 534 517 17
PROFIT/(LOSS)
1,411 1,267 144 1,651 1,520 131
Result from intersegment investments
- 144 - - 131 -
PROFIT/(LOSS)
1,411 1,411 144 1,651 1,651 131
(*) Includes Chrysler from 1 June 2011. (**) Includes income from investments, as well as impairment (losses)/reversals on non-intersegment investments accounted for under the equity method.

Industrial Activities

Net revenues for Industrial Activities totaled €83.7 billion for 2012. Excluding Chrysler, revenues for Industrial Activities totaled €35.3 billion, a 5% decrease over 2011, mainly reflecting decline in demand in Europe, particularly in Italy. The Luxury and Performance brands contributed strongly, with revenues up 7% over the prior year. For Components, revenues were in line with 2011.

Trading profit totaled €3,724 million for the year. Excluding Chrysler, trading profit was €265 million, decreasing €710 million over the €975 million in 2011. The decrease was primarily attributable to difficult trading conditions in the EMEA region. Cost containment actions only partially mitigated the impact of reduced volumes and negative pricing pressures. Luxury and Performance brands were up €40 million to €392 million, while Components reported a trading profit of €176 million.

Financial Services

Net revenues for Financial Services totaled €394 million for 2012, up 10% over 2011. Trading profit increased 25% over 2011 to €90 million.

Revenues
 Trading Profit
2012 2011 Change
(€ million)
2012 2011 Change
347 328 6% Mass-market brands (LATAM, APAC, EMEA) 75 62 13
47 30 57% Luxury and performance brands (Ferrari) 15 10 5
394 358 10% Total
90 72 18

Mass-market brands (LATAM, APAC, EMEA)

The Group offers financial services in Europe, Latin America and China directly through its financial services companies. In other markets, Fiat Group sales activities are supported by vendor programs offered jointly with leading partner banks.

In Europe, financial services activities are provided by FGA Capital, a 50/50 joint venture with the Crédit Agricole Group (accounted for under the equity method). FGA Capital supports the Group’s European sales activities with dealer financing, retail financing and medium and long-term rental. The collaboration with Crédit Agricole continued to perform successfully throughout 2012, meeting the Group’s performance expectations and commercial needs.

New loans to the dealer network totaled €13,292 million (€15,166 million in 2011). Retail financing was provided on 322,844 vehicles, representing a financed value of €4,874 million and a penetration rate of 23% on Group sales (2011: 349,983 vehicles, financed value of €5,008 million and 20% penetration rate for all Group brands).

There were new medium and long-term rental agreements on 53,643 vehicles, representing a financed value of €632 million and a penetration rate of 4.8% on Group sales (2011: 53,410 vehicle rentals, financed value of €629 million and 3.8% penetration rate for Group sales).

For Latin America and China, financial services are provided by Banco Fidis in Brazil, Fiat Credito Compania Financiera in Argentina and Fiat Automotive Finance in China. All three companies are subsidiaries of Fidis S.p.A. and also provide financing to end customers and the dealer networks of Iveco, CNH and, in China, their joint ventures.

In Italy, Fidis S.p.A. (a wholly-owned subsidiary of Fiat Group Automobiles S.p.A.) manages a factoring portfolio and issues guarantees on behalf of Fiat Group.

The average managed portfolio of Fidis and its subsidiaries was €2,963 million (€2,627 million in 2011), of which €1,304 million related to dealer financing, essentially in Brazil (€1,305 million in 2011), and €945 million to end-customer financing (€805 million in 2011).

Financial Services for Fiat Group Automobiles reported net revenues of €347 million, a 6% increase over 2011 attributable to higher volumes financed in Italy, China and Argentina, while in Brazil volumes financed declined slightly.

Trading profit totaled €75 million, up €13 million on 2011, primarily due to improved margins on the financed portfolio.

Luxury and Performance Brands (Ferrari)

Ferrari Financial Services (“FFS”) provides car financing to customers in several European countries (Germany, the United Kingdom, Switzerland, France, Belgium, Austria and Italy) through its subsidiaries FFS S.p.A. and FFS AG, and in the United States and Canada through the subsidiary FFS Inc.

FFS Japan KK, a wholly-owned subsidiary of FFS S.p.A. incorporated in September 2011 and located in Tokyo, commenced operations in the third quarter of 2012 with dealer finance and intercompany factoring activities (financing to end customers will begin in the first quarter of 2013).

The Dealer Finance business line, launched in December 2009, currently serves the networks in Europe (Germany, Switzerland, Belgium, the UK and Italy), the U.S. and Japan.

FFS reported consolidated revenues of approximately €47 million for the year, up 57% over 2011, due to higher volumes financed in the U.S. and Europe. Trading profit was €15 million, up €5 million on 2011.

Statement of Financial Position by Activity

 31.12.201231.12.2011
(€ million)
Consolidated
Industrial
Activities
Financial
Services
ConsolidatedIndustrial
Activities
Financial
Services
Intangible assets
19,284 19,279 5 18,200 18,196 4
Property, plant and equipment
22,061 22,058 3 20,785 20,781 4
Investments and other financial assets
2,290 2,759 789 2,660 3,097 755
Leased assets
1 1 - 45 45 -
Defined benefit plan assets
105 105 - 97 96 1
Deferred tax assets
1,736 1,675 61 1,690 1,622 68
Total non-current assets
45,477 45,877 858 43,477 43,837 832
Inventory
9,295 9,290 5 9,123 9,116 7
Trade receivables
2,702 2,690 20 2,625 2,619 17
Receivables from financing activities
3,727 1,600 3,643 3,968 1,681 3,906
Current taxes receivable
236 237 6 369 367 4
Other current receivables
2,163 2,131 32 2,088 2,068 22
Current financial assets:
807 724 83 789 739 52
Current investments 32 32 - 33 33 -
Current securities 256 173 83 199 147 52
Other financial assets 519 519 - 557 559 -
Cash and cash equivalents
17,657 17,411 246 17,526 17,429 97
Total current assets
36,587 34,083 4,035 36,488 34,019 4,105
Assets held for sale
55 55 - 66 66 -
TOTAL ASSETS
82,119 80,015 4,893 80,031 77,922 4,937
Equity
13,173 13,173 1,258 12,260 12,258 1,192
Provisions:
15,484 15,462 22 15,624 15,587 37
Employee benefits 6,694 6,689 5 7,026 7,022 4
Other provisions 8,79 8,773 17 8,598 8,565 33
Debt:  27,889 25,933 3,472 26,772 24,796 3,595
Asset-backed financing 449 52 397 710 213 497
Other debt 27,440 25,881 3,075 26,062 24,583 3,098
Other financial liabilities
201 198 3 429 428 3
Trade payables
16,558 16,546 20 16,418 16,399 32
Current taxes payable
231 223 15 230 228 5
Deferred tax liabilities
802 796 6 760 753 7
Other current liabilities
7,781 7,684 97 7,538 7,473 66
Liabilities held for sale
- - - - - -
TOTAL EQUITY AND LIABILITIES
82,119 80,015 4,893 80,031 77,922 4,937

Net Debt by Activity

   31.12.201231.12.2011
(€ million)
 Consolidated
Industrial
Activities
Financial
Services
ConsolidatedIndustrial
Activities
Financial
Services
Debt:    (27,889) (25,933) (3,472) (26,772) (24,796) (3,595)
Asset-backed financing   (449) (52) (397) (710) (213) (497)
Other debt   (27,440) (25,790) (1,650) (26,062) (24,503) (1,559)
Intersegment financial payables   - (91) (1,425) - (80) (1,539)
Current financial receivables from
jointly-controlled financial services companies
(a) 58 58 - 21 21 -
Intersegment financial receivables
  - 1.425 91 - 1,539 80
Debt, net of intersegment and current financial receivables from jointly-controlled financial services companies
  (27,831) (24,450) (3,381) (26,751) (23,236) (3,515)
Other financial assets
(b) 519 519 - 557 559 -
Other financial liabilities
(b) (201) (198) (3) (429) (428) (3)
Current securities
  256 173 83 199 147 52
Cash and cash equivalents
  17,657 17,411 246 17,526 17,429 97
Net debt
  (9,600) (6,545) (3,055) (8,898) (5,529) (3,369)
(a) Includes current debt payable by FGA Capital to other Fiat Group companies. (b) Includes fair value of derivative financial instruments.

Net Debt by Activity for Fiat excluding Chrysler

   31.12.2012 31.12.2011
(€ million)
 Fiat
excluding
Chrysler
Industrial
Activities
excluding
Chrysler
Financial
Services
Fiat
excluding
Chrysler
Industrial
Activities
excluding
Chrysler
Financial
Services
Debt:   (17,586) (15,630) (3,472) (16,245) (14,269) (3,595)
Asset-backed financing   (449) (52) (397) (679) (182) (497)
Other debt   (17,137) (15,487) (1,650) (15,566) (14,007) (1,559)
Intersegment financial payables   - (91) (1,425) - (80) (1,539)
Current financial receivables from
jointly-controlled financial services companies
(a) 58 58 - 21 21 -
Intersegment financial receivables
  - 1,425 91 - 1,539 80
Debt, net of intersegment and current financial receivables
from jointly-controlled financial services companies
  (17,528) (14,147) (3,381) (16,224) (12,709) (3,515)
Other financial assets
(b) 474 474 - 430 432 -
Other financial liabilities
(b) (159) (156) (3) (329) (328) (3)
Current securities
  256 173 83 199 147 52
Cash and cash equivalents
  8,854 8,608 246 10,106 10,009 97
Net debt
  (8,103) (5,048) (3,055) (5,818) (2,449) (3,369)
(a) Includes current debt payable by FGA Capital to other Fiat Group companies. (b) Includes fair value of derivative financial instruments.

Debt, cash and other financial assets/liabilities pertaining to Financial Services entities are excluded from the computation of Net Debt of Industrial Activities. In addition to its other activities, the Group treasuries of Fiat excluding Chrysler, raises funds for consolidated Financial Services companies by incurring debt on their behalf which is on-lent to those Financial Services companies. These loans from Group treasuries of Fiat excluding Chrysler (which are included within Industrial Activities) to the consolidated Financial Services companies, are included under intersegment financial receivables and are deducted in the determination of net debt for Industrial Activities to reflect the third party borrowings underlying the Financial Services companies’ debt.

Intersegment financial receivables for Financial Services companies, on the other hand, represent loans or advances to industrial companies – for receivables sold to Financial Services companies that do not meet the derecognition requirements of IAS 39 – as well as liquidity deposited temporarily with the central treasury.

Net debt for Financial Services companies at 31 December 2012 was down €314 million over year-end 2011 to €3,055 million, primarily reflecting €119 million in cash from operating activities and positive currency translation differences of €205 million, which were partially offset by €14 million in dividends paid to industrial companies.

Change in Net Industrial Debt

 20122011
(€ million)
Fiat
with
Chrysler
Chrysler
Fiat
excluding
Chrysler
Fiat
with
Chrysler 
Chrysler (7 months)
Fiat
excluding
Chrysler
Net industrial debt at beginning of year
(5,529) (3,080) (2,449) (542) - (542)
Consolidation of Chrysler net debt
- - - (3,860) (3,860) -
Cash (paid)/received for 16% ownership interest in Chrysler
- - - - 881 (881)
(Disbursements) for purchase of interests held in Chrysler by Canada and US Treasury and UST rights under Equity Recapture Agreement
- - - (490) - (490)
Net industrial debt at beginning of year after Chrysler consolidation
(5,529) (3,080) (2,449) (4,892) (2,979) (1,913)
Profit/(loss)
1,411 2,452 (1,041) 1,651 645 1,006
Depreciation and amortization
4,132 2,017 2,115 3,356 1,123 2,233
Changes in provisions and other changes
102 145 (43) (1,240) (221) (1,019)
Cash from/(used in) operating activities before change
in working capital
5,645 4,614 1,031 3,767 1,547 2,220
Change in working capital
694 1,275 (581) 1,417 204 1,213
Cash from/(used in) operating activities
6,339 5,889 450 5,184 1,751 3,433
Investments in property, plant and equipment and
intangible assets
(7,530) (4,311) (3,219) (5,525) (1,936) (3,589)
Cash from/(used in) operating activities, net of capital expenditure
(1,191) 1,578 (2,769) (341) (185) (156)
Change in consolidation scope and other changes
292 45 247 68 305 (237)
Net industrial cash flow
(899) 1,623 (2,522) (273) 120 (393)
Capital increases and dividends
(36) - (36) (140) (2) (138)
Currency translation differences
(81) (40) (41) (224) (219) (5)
Change in net industrial debt
(1,016) 1,583 (2,599) (637) (101) (536)
Net industrial debt at end of year
(6,545) (1,497) (5,048) (5,529) (3,080) (2,449)

For 2012, net industrial debt increased by approximately €1 billion.

For Chrysler, there was a reduction of €1,583 million, with €5,889 million in cash from operations more than offsetting the €4,311 million in capital expenditure during the period.

For Fiat excluding Chrysler, net industrial debt increased by €2.6 billion. Operating activities generated approximately €0.5 billion in cash, which only partially offset capital expenditures of approximately €3.2 billion. The increase in Change in consolidation scope and other changes (€247 million) related primarily to changes in the fair value of hedging instruments.

Statement of Cash Flows by Activity

    2012  2011
(€ million)
  Consolidated
Industrial
Activities
Financial
Services
Consolidated Industrial
Activities
Financial
Services
A) Cash and cash equivalents at beginning of year
  17,526
17,429
97 11,967
11,705
262
B) Cash from/(used in) operating activities:
             
Profit/(loss)
  1,411
1,411
144 1,651
1,651
131
Amortization and depreciation (net of vehicles leased out)   4,134
4,132
2 3,358
3,356
2
(Gains)/losses on disposal of non-current assets
and other non-cash items
(a) 152
41
(33) (1,106)
(1,200)
(37)
Dividends received   89 103
- 105
149
-
Change in provisions   77 90 (13) (116)
(89)
(27)
Changes in deferred taxes   (72)
(73)
1 (19)
(10)
(9)
Changes relating to buy-back commitments (b) (51)
(51)
- (62)
(62)
-
Changes related to operating leases
  (10)
(8)
(2) (28)
(28)
-
Change in working capital   714
694
20
1,412
1,417
(5)
Total   6,444
6,339
119 5,195
5,184
55
C) Cash from/(used in) investing activities:
             
Investments in:              
Property, plant and equipment and intangible assets
(net of vehicles leased out)
  (7,534)
(7,530)
(4) (5,528)
(5,525)
(3)
Subsidiaries and other equity investments   (24)
(26)
- (142)
(142)
-
Cash and cash equivalents from consolidation of Chrysler net of consideration paid for the additional 16% ownership interest   - -
- 5,624
5,624
-
Proceeds from the sale of non-current assets   139 139
- 449
448
1
Net change in receivables from financing activities   (24)
(27)
3 (1,218)
50
(1,268)
Change in current securities   (64)
(24)
(40) (14)
4
(18)
Other changes   (30)
11
(41) (29)
(253)

Total   (7,537)
(7,457)
(82) (858)
206
(1,064)
D) Cash from/(used in) financing activities:
             
Net change in debt and other financial assets/liabilities   1,679
1,536
143
(1,551)
(2,446)
895
Change in net financial receivables from
Fiat Industrial Group
  - -
- 2,761
2,759
2
Increase in share capital   22 22
- 41
41
-
(Purchase)/sale of ownership interests in subsidiaries (c) - -
- (438)
(438)
-
Dividends paid   (58)
(58)
2
(181)
(181)
(44)
Total   1,643
1,500 131 632
(265)
853
Currency translation differences   (419)
(400) (19) 590
599
(9)
E) Net change in cash and cash equivalents
  131
(18)
(149) 5,559
5,724
(165)
F) Cash and cash equivalents at end of year
  17,657
17,411
246
17,526
17,429
97
(*) For 2011, includes cash flows for Chrysler from date of consolidation (1 June 2011). (a) For 2011, the item includes reversal of the net gain of €2,017 million recognized in relation to the Chrysler transaction and reversal of unusual non-cash expense items. The item also includes reversal of a €31 million gain (€110 million loss for 2011) in the fair value of equity swaps on a basket of Fiat S.p.A. and Fiat Industrial S.p.A. ordinary shares. (b) Cash from vehicles sold under buy-back commitments for the periods reported above, net of amounts already recognized through profit and loss, is included in a separate line item under operating activities, which also includes change in working capital.

Industrial Activities
For 2012, Industrial Activities absorbed cash and cash equivalents of €18 million. Excluding Chrysler (which generated cash and cash equivalents of €1,383 million), Fiat absorbed €1,401 million in cash.

  • Operating activities generated €6,339 million in cash, of which €5,889 million attributable to Chrysler and €450 million attributable to Fiat excluding Chrysler. Operating cash flow for Fiat excluding Chrysler was impacted by a €581 million increase in working capital.
  • Investing activities absorbed a total of €7,457 million, primarily for investments in tangible and intangible assets (€7,530 million, of which €3,219 million attributable to Fiat excluding Chrysler).
  • Financing activities generated €1,500 million in cash related primarily to a net increase in borrowings (approximately €1.1 billion in net bond proceeds and €0.5 billion in other debt), which was partially offset by dividend payments to Fiat S.p.A. shareholders and minorities in group subsidiaries (€58 million).

Financial Services
Cash and cash equivalents for Financial Services totaled €246 million at 31 December 2012, increasing €149 million over the beginning of the year.

Changes in cash were attributable to:

  • Operating activities, which generated €119 million in cash (principally net profit plus amortization and depreciation).
  • Investing activities (including changes in financial receivables from/debt payable to industrial companies), which absorbed €82 million in cash, primarily due to an increase in the lending portfolio, net of repayment of loans from treasury companies (included under other changes).
  • Financing activities, which generated a total of €131 million in cash, consisting of €143 million of net inflows from new financing, net of dividends paid to companies included under Industrial Activities.

Fiat SpA | Site Map | Legal Notes | Privacy | Contacts | Accessibility | FAQs | Glossary | General Archive   ©2011 FIAT S.p.A. - P.IVA 00469580013