FIAT
GROUP
FOURTH QUARTER AND FULL YEAR 2006 RESULTS
SIGNATURES
FOURTH
QUARTER AND FULL YEAR 2006 RESULTS
Fiat
Group closes the year ahead of guidance, with € 52 billion in revenues, up more
than 11% on 2005, and trading profit of € 2 billion, double last year’s level,
with all major sectors posting year-over-year improvements. Net income reached
€
1.2 billion and provides the basis for the Board’s recommendation to pay € 276
million aggregate dividends across all share classes (first time since 2002).
On
a comparable basis, net income was € 1.4 billion higher than 2005. Net
industrial debt at year-end was below € 1.8 billion. Liquidity remained strong
with nearly € 8 billion on hand. 2007 targets
confirmed.
The
Board of Directors of Fiat S.p.A. met today in Turin under the chairmanship
of
Luca Cordero di Montezemolo to approve the consolidated results of the Group
for
the fourth quarter and full year 2006.
Ø
Group
revenues of € 51.8 billion rose 11.4%, driven in the main by Fiat Auto
which increased its top line 21.3% to € 23.7 billion, and a 7.7% rise in
sales of the truck sector (Iveco) to € 9.1
billion.
·
Continued
success of recent models enabled Fiat Auto to meet its full year
2 million
unit
volume target, its highest sales level since
2001.
·
Agricultural
and construction equipment (CNH) revenues were up 3.1% (2.4% on a
comparable currency basis).
·
Sales
also grew in our Components & Production Systems
businesses: Fiat Powertrain Technologies
up 11.0% (on a
comparable basis) and Magneti Marelli up 10.5%. Comau was down by
18.6% on
weak industry demand.
Ø
Trading
profit at € 1,951 million was nearly twice last year’s
level.
·
For
the first time since 2000, Fiat Auto achieved a positive full year
trading
result of € 291 million (up € 572 million on year 2005) ahead of its
initial target of € 200 million
with
§
all
quarters in the year positive
§
and
ex-Brazil operations showing positive results in the fourth
quarter.
·
CNH
trading profit was up at € 737 million, 5.6% higher than 2005, with
trading margins of 7%.
·
Iveco
trading profit rose 64% to € 546 million (6% of revenues) at the upper end
of 2006 target levels.
Ø
Net
income totalled € 1,151
million,
€ 1,041 million excluding unusual items. Gains on disposals were partially
offset by unusual charges mainly related to restructuring at CNH
and
Comau.
Ø
Net
industrial debt came down to below € 1.8 billion, on the back of strong
industrial cash flow generation.
Ø
Group
signed 13 focused industrial and financial services agreements with
international partners.
Ø
An
aggregate dividend distribution of €276 million will be proposed to
shareholders, including a cumulative 3 year dividend on savings
shares.
Ø
2007
targets are confirmed.
The
Group
Fiat
Group
recorded
revenues
of € 51.8 billion
in 2006, up 11.4% from 2005. The improvement was largely attributable to Fiat
Auto and Iveco.
Revenues
in the
Automobiles business area rose by 20.2% to € 25.6 billion, driven by higher
sales volumes at Fiat Auto, whose revenues rose by 21.3% to € 23.7 billion.
Ferrari revenues also increased by 12.3%.
Iveco
had revenues
of € 9.1 billion, up 7.7% on higher volumes and better pricing.
CNH
reported a 3.1%
increase in revenues (2.4% excluding the foreign exchange translation impact)
to
€ 10.5 billion. Higher volumes in construction equipment and better pricing were
partially offset by the decrease in volume of agricultural
equipment.
Revenues
at the
Components & Production Systems business area1amounted
to € 12.4
billion in 2006, up 8.0% on a comparable scope of operations. Revenues rose
at
Fiat Powertrain Technologies (+11.0% on a comparable basis) and Magneti Marelli
(+10.5%). Teksid reported a 5.5% drop in revenues due to the sale of part of
our
French operations (+3.5% on a comparable basis). Comau revenues were down 18.6%
reflecting a severe slowdown in industry-wide demand for its
services.
Q4
2006
revenues totalled
€ 13.9 billion, up 5.5% from € 13.1 billion in Q4 2005.
In
2006
Trading
profit amounted
to€
1,951
million
(3.8% of revenues), nearly doubling the €1,000 million level recorded in 2005
(2.1% of revenues). Significant improvements were achieved in the Automobiles
business area, particularly at Fiat Auto, which reported a full year trading
profit of € 291 million, against a trading loss of € 281 million in 2005, and by
Iveco, whose trading profit rose from € 332 million to € 546 million. CNH posted
a 5.6% increase in trading profit, from € 698 million to € 737 million
(excluding the difference in the one-time impact from a reduction in health-care
costs, the year-over-year improvement would have been € 97 million or 15.8%).
The Components & Production Systems business area reported slightly lower
trading profit (€ 348 million versus € 358 million in 2005) reflecting a sharp
drop at Comau, currently in a restructuring process, only partly offset by
improvements at Magneti Marelli, Fiat Powertrain Technologies and Teksid.
Excluding Comau, trading profit of the Components & Production Systems
business area increased by € 98 million, delivering a trading margin of
3.7%.
In
Q4
2006,
Group trading
profit was € 542 million,
a € 181 million or
50% improvement over Q4 2005.
1
Since January 1, 2006,
this business area includes also Fiat Powertrain Technologies (FPT), which
is no
longer included in the Automobiles business area. FPT perimeter comprises the
passenger vehicles engine and transmission activities - over which Fiat regained
control and started to consolidate in May 2005 following termination of the
Master Agreement with General Motors - as well as the industrial powertrain
activities that until December 31, 2005 were included in the perimeter of Iveco.
The relevant 2005 figures have been reclassified accordingly.
Operating
income
for the year
totalled € 2,061 million, compared with € 2,215 million in 2005. The € 154
million decrease reflects higher trading profit of € 951 million and lower net
unusual income of € 1,105 million (2005: € 1,215 million, 2006: € 110 million).
In 2006 gains on disposals of investments were € 607 million (mainly due to the
Fiat Auto Financial Services transaction, € 463 million, and the
sale of Banca
Unione di Credito, €
80
million),
while restructuring costs amounted to € 450 million (mainly relating to CNH and
Comau) and other unusual charges to € 47 million. In 2005 unusual gains were € 2
billion (mostly due to € 1.1 billion from the General Motors settlement and gain
of € 878 million on the sale of the investment in Italenergia Bis), while
restructuring charges and other unusual costs amounted to € 824
million.
Net
financial expenses
totalled € 576
million in 2006, down from € 843 million in 2005. The decrease was primarily
attributable to a reduction in net industrial debt mainly related to the
conversion
of the
Mandatory Convertible Facility, the completion of the Italenergia Bis
transaction in September 2005 , and positive industrial cash flow.
Investment
income was
€
156
million
in 2006 as compared with € 34 million in 2005 when the Group re-valued some of
its equity investments in China.
Income
before taxes
totalled € 1,641
million in 2006, compared with € 2,264 million in 2005. Net of changes in
unusual items (including the € 858 million unusual financial income on the
conversion of the Mandatory Convertible Facility), income before taxes improved
by € 1,340 million in 2006.
Income
taxes
amounted to € 490
million in 2006 compared with € 844 million in 2005 which included the taxes
related to receipt of the GM indemnity and € 119 million in connection with
prior years.
Net
income
before minority interest for
the year was €
1,151 million, compared with a € 1,420 million in 2005. Excluding the impact of
net unusual items, the Group would have posted a net loss of € 376 million in
2005 and a net income of € 1,041 million in 2006. Therefore, on a like-for-like
basis, net income improved by € 1,417 million.
Net
industrial debt
decreased during
the year by approximately € 1.4 billion to € 1.8 billion, reflecting positive
business performance and notwithstanding the re-acquisition of a 28.6% stake
in
Ferrari for € 893 million. The ratio of net industrial debt to equity at the end
of 2006 was 0.18 (0.34 at the end of 2005).
The
Group’s
cash
position at
December 31,2006 was approximately € 8.0 billion, (€ 7.0 billion at the end of 2005) largely
impacted by the over € 3 billion deriving from the closing of
the joint
venture between Fiat Auto and Crédit Agricole at the end of December 2006,
partly offset by the utilization of cash to reduce gross debt during the
year.
The
Group
generated
net
industrial cash flow (change
in net
industrial debt excluding capital contributions, dividends paid and foreign
exchange translation differences) of approximately € 1.4 billion, reflecting
positive business performance.
Stockholders’
equity before minority interest
was € 10.0 billion
compared with € 9.4 billion at December 31, 2005.
In
2006, Fiat
Group’s industrial operations capital
expenditures
(including
capitalized development costs) amounted approximately to € 2.9 billion, a € 0.2
billion increase against the prior year. In addition, the Group expensed
approximately € 1.4 billion in research and development costs, in line with
2005.
Dividends
On
the basis of the
Group’s 2006 consolidated results and our
estimates of
income available for distribution for Fiat S.p.A., the Board of Directors
intends to propose to the Annual Shareholders’ Meeting the payment of a dividend
for approximately € 276 million. The amount of such distribution is in line with
the announced dividend policy whereby in 2007-2010 the Group intends to
distribute to its shareholders approximately 25% of the Group consolidated
net
income. The proposed dividend distribution will be as follows:
·
€
0.155
per
ordinary share, representing a total distribution of approximately
€ 169 million;
·
€
0.31
per
preferred share, representing a total distribution of approximately
€ 32
million;
·
€
0.93
per
saving share, representing a total distribution of approximately
€ 74
million, which includes the dividend pertaining to 2006, equal to
€ 0.31,
and cumulative dividends for the two preceding years, 2005 and 2004,
as
required by the Company’s By-laws.
This
proposal is
subject to the approval of the Fiat S.p.A. 2006 statutory
unconsolidated financial statements, which will be finalized by the Board on
February 20, 2007.
Automobiles
As
a result of the
sharp rise in volumes in 2006, the Automobiles
business area achieved
an
increase in revenues
of 20.2% to € 25.6
billion. In particular Fiat
Auto
(Fiat, Alfa Romeo,
Lancia and Fiat Light Commercial Vehicles) had revenues
of € 23.7 billion,
up 21.3% over 2005.
The
growing success
of new models had a positive impact on trading performance throughout the year.
In 2006, Fiat’s new product portfolio of the Grande Punto and Panda was joined
by the Sedici and the new versions of the Panda, the Cross and the 100 HP.
Alfa
Romeo introduced the 159
Sportwagon,
Brera, and Spider, followed in November by the Q2 versions of the 147 and GT.
Lancia introduced the Centenary versions of Ypsilon and Thesis, followed in
September by the New Ypsilon.
Fiat
Auto overall
deliveries rose by approximately 280,000 units, to nearly 2 million units
(1,980,300 units, cars and commercial vehicles), an increase of 16.7% from
2005,
outperforming the overall automobile markets in which it competes.
Fiat
Auto’s market
shares also improved to 30.7% in Italy (+2.7 percentage points) and to 7.6%
in
Western Europe (+1.1 percentage point), where it posted the best performance
of
the last four years.
In
Western Europe,
with a relatively flat demand, Fiat Auto deliveries increased by 17.2%
(1,289,600 units delivered), posting the highest growth rate among the leading
car manufacturers. In Italy, Fiat Auto deliveries rose by 17.5%, four times
higher than the growth in market demand (+3.7%). Volumes grew significantly
in
all key European countries: +42.8% in Great Britain and +10.9% in France,
despite the market contraction (Great Britain -4%, France -3%); +21.3% in
Germany, five times higher than the rise in demand (+4%). In Spain Fiat Auto
reported a slight decline (-1%), in line with market performance.
In
Brazil, where
market demand expanded by 13.1%, Fiat Auto deliveries rose by 15.0%, achieving
a
market share of 25.3% (+0.9 percentage point). In Poland, where demand remained
weak, deliveries dropped by 2.3%, while the Sector’s market share remained
substantially unchanged from 2005, at 10.3%.
The
performance of
commercial vehicles also improved during the year. This improvement was mainly
attributable to the highly acclaimed new Ducato, launched in late May 2006,
and
the new Doblò. The success of the commercial vehicles range should also benefit
from the January 2007 launch of the new Scudo, presented in November. A total
of
323,500 commercial vehicles were delivered (+13.4%), generating a significant
improvement for the Sector’s market share in Italy, which rose to 47.1% (+4.7
percentage points), and in Europe.
In
2006 Fiat Auto
had a trading
profit
of € 291 million
(1.2% of revenues), a sharp improvement from the loss of € 281 million of 2005.
The change is mainly attributable to higher volume, a more favourable product
mix due to the new models, lower product costs thanks to purchasing
efficiencies, continuous containment of governance costs, despite higher
investments in marketing and network development.
In
Q4
2006
Fiat Auto had
revenues of € 6.4 billion, up 15% over Q4 2005. Trading profit came in at € 95
million, an improvement of € 74 million from Q4 2005.
The
increase in
deliveries (+11.3%) from Q4 2005 reflects the positive impact of the new models
launched. In Western Europe Fiat Auto volumes rose by 4.2% and its market share
grew to 7.6% (+0.8 percentage point). Positive performances were reported in
all
European countries, except for Spain.
In
Italy, Fiat Auto
achieved a market share of 30.9% (+1.9 percentage point).
In
2006
Maserati
had
revenues
of
€
519
million,
with 5,734 units delivered to the sales network. Sales
volumes
increased by 3% on a year-over-year basis, while revenues decreased by 2.6%
from
2005, which had benefited from the success of the special MC12 series.
The
trading
loss
of Maserati was €
33 million, a sharp improvement (up € 52 million) from the trading loss of € 85
million in 2005, due to efficiency gains.
Maserati’s
revenues
in Q4
2006
were €
144million,
up 17.1%
from Q4 2005.
Trading
loss was €
1 million, an improvement from the € 22 million trading loss of Q4 2005.
Sales
of the new versions of the Quattroporte Sport GT, GranSport MC Victory and
GranSport Spider began in 2006, and new outlets were opened in China, Russia,
Australia and Sweden.
Ferrari
posted
revenues
of
€
1,447
million in
2006. The 12.3% increase from 2005 is largely attributable to the success of
the
F430 and 599 GTB models. Revenues were also boosted by sales in the Middle
East
and Far East markets.
Deliveries
of
homologated cars to the sale network during the year totalled 5,650 units,
up 5%
from 2005, while not homologated cars amounted to 188 units.
Ferrari
closed 2006
with a trading
profit of
€
183million,
up from a
profit of €
157million
in 2005.
The improvement reflected higher sales volumes and efficiency gains, which
were
partially offset by higher research and development expenses .
During
the year,
Ferrari introduced the 599 GTB, equipped with the most innovative and
technologically advanced content applied by Ferrari to a two-seater, front
engine car.
In
Q4
2006
Ferrari
had
revenues of €
409
million, up
7.1% over Q4 2005 as a result of an improved product mix. Trading profit
totalled €
81
million versus
€
83
million in Q4 2005, due to a favourable product mix offset by higher research
and development expenses.
Agricultural
and Construction Equipment
In
2006
CNH
- Case
New Holland
had revenues
of € 10.5 billion,
an increase of 3.1% over 2005 (2.4% on a comparable currency basis). Better
pricing and higher volumes for construction equipment were partly offset by
a
decrease in deliveries of major agricultural equipment.
In
2006, the world
agricultural
equipment
market expanded
9%, with contrasting trends across regions: volumes Latin and North American
dropped slightly, while they were up slightly in Western Europe and
significantly in other markets (ROW). CNH tractor shipments were down in North
America and Rest of World, flat in Western Europe, and up in Latin America.
Combine harvester volumes were down in all markets except ROW.
The
global
construction
equipment
market expanded by
11% from 2005, with growth in all markets except North America which was stable.
CNH unit shipments were up 3.4%, in all markets except North
America.
CNH
trading
profit
for the year was €
737 million, € 39 million higher than the trading profit of € 698 million
reported for 2005. Net of one time healthcare renegotiation benefits (€ 25
million in 2006 and € 83 million in 2005) the trading profit of CNH would have
increased by € 97 million due to improvements in construction equipment volumes,
better pricing and production cost efficiency gains, partially offset by
reductions in volume of agricultural equipment.
CNH
revenues in the
fourth
quarter of 2006
amounted to €
2,547 million, a decrease of 1.4% from the fourth quarter of last year (+2.3%
on
a currency equivalent basis). Better pricing was partly offset by volume
decreases in tractors and combines and unfavourable mix for agricultural and
construction equipment segments.
CNH
closed the
fourth quarter of 2006 with a trading profit of € 190 million, up € 30 million
from trading profit of € 160 million in the fourth quarter of 2005.
In
the Agricultural
Business, during the year, Case IH launched its new ATX700 large hoe drill
and
New Holland launched in Latin America the new CR980 combine. In the Construction
Equipment Business, Case filled the gap in the largest market segments with
its
new compact track loaders and New Holland Construction introduced in North
America the backhoe loaders featuring enhanced lift performance capabilities
and
controls.
Trucks
and Commercial Vehicles
Iveco
had
revenues
of € 9.1 billion
in 2006, up 7.7% over 2005. The improvement stemmed from an increase in sales
volumes and better pricing.
During
the year,
Western European market for commercial vehicles recorded positive performances
across all segments (+2.3%).
In
2006, Iveco
delivered a total of 181,500 vehicles (including 17,600 units with buy back
commitments), up 5.2% from 2005. In Western Europe, deliveries totalled 135,100
vehicles, an increase of 3.2% over 2005, mainly as a result of particularly
strong performances in Germany and Spain. Conversely, deliveries were down
in
Italy and Great Britain. Deliveries increased in Eastern Europe, Africa and
the
Middle East, while they remained substantially stable in Latin
America.
Iveco
sales
benefited from the market’s interest in the new Daily, launched in late
May.
In
2006, Iveco’s
market share in Western Europe remained substantially unchanged at 10.7%. In
particular, the light-range Daily confirmed its position as the top seller
in
the 3.5 ton segment while, in the medium segment, the Eurocargo remained
co-leader with over 25% of the market.
Iveco
had
a
trading
profit of
€
546
million,
equal to 6% of revenues, a sharp improvement from € 332 million in 2005 (+ 64%)
and at the upper end of target levels.
The
increase was
mainly attributable to higher sales volumes, better pricing, and efficiency
gains on materials, production and governance costs resulting from the
streamlining program undertaken in 2005.
Revenues
totalled €
2.7 billion in
Q4
2006,
up 7.1% from the
same period in 2005, due to higher volumes and better pricing. Trading profit
was € 157 millions, a 36.5% increase from the same period in 2005.
Components
and Production Systems
In
2006, revenues
of
Fiat
Powertrain Technologies
totalled € 6.1
billion (on a comparable basis an increase of 11% from 2005). Part of the
Sector’s output was sold to other Group Sectors, while sales to third parties
and joint ventures represented 26% of revenues.
In
2006, revenues
of the Passenger
& Commercial Vehicles
product line
totalled € 3.4 billion, (€ 2 billion in the May-December 2005 period). The
product line delivered 2,328,000 engines, approximately 22% of which were diesel
engines sold to third parties (General Motors and Suzuki), and 1,695,000
transmissions, mainly to Fiat Auto.
The
Industrial
& Marine
product line had
revenues of € 2.7 billion in 2006 (+4.9% compared with 2005). 444,000 engines
were delivered (increase of 1.9% from 2005), mainly to Iveco (44%), CNH (19%)
and Sevel (24%). In addition, 113,000 transmissions (-1.4%) and 262,000 axles
(+9.3%) were sold essentially to other Group Sectors.
In
2006, Fiat
Powertrain Technologies had a trading
profit of
€
168
million,
up from € 109 million in 2005 which included only eight months for Passenger
& Commercial Vehicles operations. Growth mainly stemmed from purchasing and
manufacturing efficiencies, which more than offset higher raw material prices,
mainly aluminium and oils. A different scope of activities also positively
contributed to the improvement.
In
Q42006,
Fiat Powertrain
Technologies had revenues of € 1.6 billion (28% of which to third parties and
joint ventures), a 10.4% increase from Q4 2005. The Passenger & Commercial
Vehicles product line posted revenues of € 925 million (up 13.8%), and sold
598,000 engines (+10.7%) and 437,000 transmissions (+10.6%). The Industrial
& Marine product line had revenues of € 696 million (+5% from Q4 2005) and
sold 113,000 engines (+3%), 16,000 transmissions (+20.3%) and 65,000 axles
(+9.8%).
In
Q4 2006, Fiat
Powertrain Technologies had a trading profit of 50 million euros, nearly double
the € 27 million posted in Q4 2005.
In
2006,
Magneti
Marelli
had revenues
of € 4.5 billion.
The 10.5% increase from 2005 was attributable to higher sales of Fiat, Lancia,
and Alfa Romeo models and an increase of new applications on car models of
the
Group and of other car makers (telematics, hi-tech products of the Lighting
business unit, and Selespeed gears). Based on the same scope of activities,
revenues would have increased by 14.2%.
Trading
profit
of Magneti Marelli
in 2006 totalled € 190 million, up € 28 million over 2005. The improvement
stemmed from higher sales volume, streamlining of the cost base and efficiency
gains which more than offset price pressures.
In
Q4
2006,
Magneti Marelli
reported revenues of € 1.1 billion. On a like-for-like basis, the increase was
9.0%. Trading profit was € 54 million, versus € 49 million in Q4
2005.
Teksid
had revenues
of € 979 million,
down 5.5% from the previous year. The decrease reflects the disposal of SBFM,
a
French company operating in the cast iron business. On a comparable basis,
revenues would have increased by 3.5%. In
December 2006,
an agreement was reached for the sale of the interest held in Meridian
Technologies Inc. (Magnesium Business Unit).
Teksid
closed 2006
with a
trading
profit
of €
56
million, an
increase over the €
45
million reported
in 2005.
In
Q4
2006,
Teksid had
revenues of €
236
million, down
10.3% compared with the same period of 2005. Excluding the change in the scope
of operations, the decrease in revenues would
have been
2.9%, mainly as a result of lower volumes in the Magnesium Business Unit.
Trading profit was €
11
million, in line
with Q4 2005 results.
Comau
had revenues
of € 1,280 million
in 2006, down 18.6% from 2005. The change in revenues is mainly attributable
to
the European Body-welding operations which were negatively impacted by difficult
trading conditions.
Conversely,
service activities reported revenue increases, especially in the Mercosur
area.
The
low level of
investments by car manufacturers negatively impacted the Sector’s order intake
in 2006 which totalled €
1.2
billion
(-16.0%). This decline was only partially offset by higher orders for the
Service activities. The order backlog at the end of 2006 totalled €
578
million, down
19.0% from the end of 2005.
In
2006 Comau had a
trading
loss of
€
66
million,
compared with a trading profit of €
42
million in
2005. Decreases were reported by all business areas, except for the Service
activities in the Mercosur area and the Plastic Moulds operations in Europe.
A
particularly sharp decline in volumes and margins was reported by the
Body-welding operations in Europe.
In
Q4
2006
Comau
had revenues
of €
340
million, down 29.5% year-over-year. Trading loss was €
37
million,
compared with a trading profit of €
32
million in Q4
2005.
Starting
from Q3
2006, the business has undergone an intense reshaping and restructuring process
in response to the Sector’s negative performance and declining order backlog.
Benefits associated with these efforts will be partly visible in 2007, with
the
full impact reflecting in margins by 2008.
In
2006, the
trading
profit of
the Components
& Production Systems business area as a whole was €
348
million, equal
to 2.8% of revenues (vs. 3.3% in 2005).
Other
Businesses
Business
Solutions had
revenues
of
€
668
million,
down 11.2% from 2005. The
decrease
stemmed mainly from the change in the scope of consolidation, in particular
the
sale of Atlanet (Telecommunication).
Trading
profit
of Business
Solutionswas
€ 37
million in 2006, a € 4 million improvement on a comparable consolidation basis,
reflecting cost efficiency gains.
In
Q42006
revenues totalled
€ 206 million, (€ 193 million in Q4 2005) and trading profit was € 12
million.
As
of January 1,2007, Business Solutions’ activities were transferred to Fiat Services, a
company which will provide services exclusively to the Fiat Group (starting
from
2007 Fiat Services will be included among Holding & Other companies). The
Business Solutions Sector will therefore cease to exist.
Itedi
had
revenues
of € 401
million in 2006,
up 1%
from 2005, mainly
due to higher advertising revenues at Publikompass.
In
2006 Itedi had a
trading
profit of
€
11
million, compared
with € 16 million in 2005. The decrease is attributable to higher costs borne by
Editrice La Stampa for the launch of the new newspaper format, which took place
on November 19 2006, and higher paper costs.
Revenues
totalled €
119 million in Q42006.
The 7.2% increase
over Q4 2005 was mainly attributable to higher advertising revenues at
Publikompass. Trading profit in Q4 2006 was € 8 million, compared with € 7
million in Q4 2005. The higher profit margin at Publikompass offset higher
costs
incurred at Editrice La Stampa.
In
2006 the trading
loss of all remaining activities, including holding companies and the impact
of
eliminations and consolidation adjustments, decreased by € 61 million, mainly
due to the effect of the reorganization and rationalization of non core
activities and central structures.
From
turnaround to growth
2006
was an
important year for the future of the Fiat Group, marking the completion of
an
intense restructuring phase on the basis of which the Group is now poised to
drive for growth and margin expansion over the period 2007-10.
The
plan
implemented over the previous three years was based on a clean break with the
past.
Fiat’s
managerial
structure was reshaped and strengthened, with the creation of lean organizations
across all businesses. Sectors’ operations were reorganized with special
attention focused on strengthening the brands’ market position. Efforts were
directed to rationalizing processes and recovering profitability in all Group
business areas.
All
set targets
were achieved, and in many cases even exceeded.
The
first
breakthrough was made in 2005, when the Group began turning a net profit again
and the Auto sector posted the first trading profit after 17 consecutive
quarters of losses.
The
improvements
have continued in 2006, with Fiat Auto posting the first full year of profits
since 2000. The restructuring efforts were accompanied by a major renewal of
its
product line. This resulted in the introduction of 22 new models and facelifts
in 2 years and enabled Fiat Auto to achieve significant market share
improvements both on the domestic market and on the main European markets.
The
other Sectors
and especially Iveco and CNH also underwent a phase of internal reorganization
and repositioning on the market. Together with the introduction of new products,
this generated a good level of top line growth and significant margin expansion.
The
plan marked out
for the next four years is even more ambitious and challenging.
It
is a plan geared
towards growth.
Improved
operating
performance across all businesses, accompanied by significant investments and
growing profitability in every business area, will consolidate Fiat’s position
as a major industrial group.
Here
again, the
targets set for each of the years up to 2010 are clear and unambiguous.
According
to the
plan, by 2010 the Group will generate € 67 billion in revenues and € 5 billion
in trading profit, a figure never reached before by the Fiat Group.
The
international
agreements made in 2006 will help in this phase of growth.
Fiat
Auto entered
into a number of alliances aimed at strengthening its presence in two high
growth markets, Russia and India. In Russia, Fiat and Severstal Auto signed
three major agreements related to import and distribution in Russia of
Fiat-branded cars and commercial vehicles, as well as to local assembly of
certain Fiat models and for the local manufacturing of Ducato. In
India, Fiat and
Tata Motors closed an agreement on dealer network
sharing and
established industrial joint-ventures to manufacture passenger vehicles, engines
and transmissions. The two groups are also considering joint manufacturing
of
utility vehicles in Argentina.
In
May Fiat Auto
reached an agreement with PSA-Peugeot Citroën for the assembly at the Fiat Auto
Cordoba plant of a gearbox earmarked for the French partner.
A
special mention
goes to the partnership between Fiat Auto and Crédit Agricole, which resulted in
the creation in December 2006 of a 50/50 joint venture called Fiat Auto
Financial Services (FAFS). This company will handle all retail auto financing,
dealership financing, long term car rental and fleet management activities
in
Europe.
Iveco
also
significantly accelerated its growth strategy, mainly focused on the Chinese
market, through the signing of a joint-venture agreement with SAIC Motor
Corporation Ltd and with Chongqing Heavy Vehicle Group Co.Ltd in the heavy
range
segment. In an effort to complete its strategy of having a full range of
commercial vehicles in China, Iveco also signed an agreement with Nanjing
Automotive Corporation (NAC) for the acquisition of all commercial
vehicle-related businesses conducted by the Yuejin Motor Company. In December,
Iveco signed a letter of intent with Fiat Powertrain Technologies and SAIC
to
establish a long-term partnership for the production of engines for heavy and
medium vehicles.
Outlook
for 2007
The
Western
European automobile market is expected to remain stable in 2007, while demand
in
Brazil should show moderate growth.
In
this context,
the Group’s Automobile Sector plans to leverage the introduction of its new
models (mainly Fiat Bravo, Fiat Linea and Fiat 500) to continue to boost volume
and improve mix in the European markets. Meanwhile, our Brazilian operations
are
expected to deliver a trading performance in line with 2006.
Aggressive
cost-cutting will continue in all non-essential areas of the company.
While
streamlining
governance costs we will continue to invest in marketing and advertising, in
order to support our growth ambitions.
The
agricultural
tractor industry is expected to continue running at high levels, while the
combine industry should recover from the recent declines on the back of pricing
recovery in corn and soybeans. The worldwide construction-equipment industry
should remain strong for both heavy and light equipment, although the North
American markets are expected to soften for a year before resuming upward growth
in 2008.
In
this context,
CNH expects to improve sales volumes thanks to new products, improved pricing
and market share gains. Higher volumes, manufacturing efficiencies and other
cost reductions will be partially offset by continuing higher R&D
investments.
In
Western Europe, the market for light, medium and heavy commercial vehicles
is expected to remain substantially stable.
In
this
environment, Iveco aims at increasing both profitability and market share by
a
substantial commercial repositioning, with price improvements coming from the
introduction of new Euro 4 and Euro 5 compliant vehicles. For heavy
trucks, Iveco will be leveraging the performances of the new Stralis, especially
in terms of fuel efficiency and the improvement in the resale value of our
vehicles.
To
reach our
targets, we will continue to push group-wide purchasing synergies, increasing
and accelerating development of best-cost-country spending, strengthening
strategic partnerships with suppliers through long-term contracts, and focusing
on the implementation of our world-class manufacturing initiative.
As
a result, the
Group confirms its targets for 2007: trading profit between € 2.5 and € 2.7
billion (4.5% to 5.1% trading margin) and net income between € 1.6 and € 1.8
billion.
By
sector,
full-year 2007 trading margin targets (trading profit as a percentage of
revenues) will range as follows:
·
Autos,
2.6%
to 3.4%;
·
CNH,
8.9% to
9.7%;
·
Iveco,
7.1%
to 7.9%.
While
working on
the achievement of these objectives, the Fiat Group will continue to implement
its strategy of targeted alliances, in order to reduce capital commitments,
and
reduce the related risks.
With
year 2007
starts the launch of an ambitious growth and profitability plan, which by its
completion in 2010 will have seen the rebuilding of Fiat into a significant
international industrial enterprise.
The
2006
Full-year and Q4 results will be reviewed by management in a conference call
with analysts and institutional investors today at 4:00 p.m. The call can be
accessed live and in replay format on the Fiat Group website, www.fiatgroup.com
Consolidated
Income Statement
Unaudited
4th
quarter
4th
quarter
Full
year
Full
year
2006
2005
(in
millions of euros)
2006
2005
13,859
13,140
Net
revenues
51,832
46,544
542
361
Trading
profit
1,951
1,000
440
4
Gains
(losses)
on the disposal of investments
607
905
313
-
Restructuring
costs
450
502
(17)
(4)
Other
unusual
income (expenses)
(47)
812
652
361
Operating
result
2,061
2,215
(158)
(195)
Financial
income (expenses)
(576)
(843)
-
-
Unusual
financial income
-
858
46
28
Result
from
investments
156
34
540
194
Result
before taxes
1,641
2,264
70
110
Income
taxes
490
844
470
84
Result
from continuing operations
1,151
1,420
-
-
Result
from
discontinued operations
-
-
470
84
Net
result
1,151
1,420
Attributable
to:
452
38
Equity
holder of the parent
1,065
1,331
18
46
Minority
interest
86
89
Net
revenues
Unaudited
4th
quarter
Full
year
2006
2005
%
change
(in
millions of euros)
2006
2005
%
change
6,932
6,039
14.8%
Automobiles
(Fiat Auto, Maserati, Ferrari)
25,577
21,275
20.2%
2,547
2,584
-1.4%
Agricultural
and Construction Equipment (CNH)
10,527
10,212
3.1%
2,684
2,507
7.1%
Trucks
and Commercial Vehicles (Iveco)
9,136
8,483
7.7%
3,199
3,226
-0.8%
Components
and Production Systems
(FPT,
Magneti
Marelli, Teksid, Comau)
12,366
10,727
n.s.
451
439
2.7%
Other
Businesses (Services, Publishing and Communications, Holding
companies and
Other
companies)
1,581
1,618
-2.3%
(1,954)
(1,655)
-
Eliminations
(7,355)
(5,771)
-
13,859
13,140
5.5%
Total
for the Group
51,832
46,544
11.4%
Trading
profit
Unaudited
4th
quarter
Full
year
2006
2005
change
(in
millions of euros)
2006
2005
change
175
82
93
Automobiles
(Fiat Auto, Maserati, Ferrari)
441
(209)
650
190
160
30
Agricultural
and Construction Equipment (CNH)
737
698
39
157
115
42
Trucks
and Commercial Vehicles (Iveco)
546
332
214
78
120
-42
Components
and Production Systems
(FPT,
Magneti
Marelli, Teksid, Comau)
348
358
-10
(58)
(116)
58
Other
Businesses (Services, Publishing and Communications, Holding
companies and
Other
companies) and Eliminations
(121)
(179)
58
542
361
181
Total
for the Group
1,951
1,000
951
Change
in Net Industrial Debt
Unaudited
(in
millions of euros)
Full
year
2006
Full
year
2005
Net
Industrial Debt at period-start
(3,219)
(9,447)
Net
income
1,151
1.419
Amortization
and depreciation (net of vehicles sold with buy-back
commitments)
2,639
2.392
Change
in
reserves and others
(474)
(544)
Cash
Flow from Operating Activities before change in working
capital
3,316
3,267
Change
in
working capital
679
92
Cash
Flow from Operating Activities
3,995
3,359
Investments
in
tangible and intangible assets (net of vehicles sold with buy back
commitments)
(2,854)
(2.636)
Cash
Flow from Operating Activities net of investments
1,141
723
Changes
in
receivables from financing
149
409
Change
in
investments, scope of activity and other
106
2.285
Net
Industrial Cash Flow
1,396
3,417
Capital
Increase, dividends, disposal/purchase of treasury stock
(1)
2.971
Translation
exchange differences
51
(160)
Change
in Net Industrial Debt
1,446
6,228
Net
Industrial Debt at period-end
(1,773)
(3,219)
Principal
exchange rates used in 2006 and 2005 to translate into euros the financial
statements prepared in currencies other than euro.
Currency
Average
2006
At
12.31.2006
Average
2005
At
12.31.2005
U.S.
dollar
1.256
1.317
1.244
1.180
Puond
sterling
0.682
0.672
0.684
0.685
Swiss
franc
1.573
1.607
1.548
1.555
Polish
zloty
3.896
3.831
4.023
3.860
Brasilian
real
2.734
2.815
3.027
2.761
Argentine
peso
3.879
4.066
3.637
3.589
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.