FCA Sees Higher Revenue, Margins in 5-Year Plan

AUBURN HILLS, MI – Fiat Chrysler Automobiles sees revenue growing to €132 billion ($184 billion) in 2018, up from €87 billion ($121 billion) in 2013, on renewal of its products in the NAFTA region, growth in the Maserati luxury marque, launching Alfa Romeo and the expansion of the Jeep brand globally.

Net income also is seen rising in the next five years, to €4.7 billion-€5.5 billion ($6.5 billion-$7.7 billion), from €900 million ($1.3 billion) in 2013.

Earnings before interest, taxes, depreciation and amortization will grow as well, from €3.5 billion ($4.9 billion) in 2013 to €8.7 billion-€9.8 billion ($12.1 billion-$13.6 billion) in 2018. Profit margin is expected to grow in the same period from 4.1% to 6.6%-7.4%.

Total FCA volume is predicted to grow to 7.0 million units in 2018, up from 4.4 million in 2013, largely driven by the Jeep brand, whose volume is projected to reach 1.9 million units in 2018 from 700,000 million worldwide sales in 2013.

Chief Financial Officer Richard Palmer says Jeep makes up almost 50% of the planned 2.6-million-unit growth for FCA by 2018.

Breaking projected volume down by region, NAFTA still will account for the most total sales, with 3.1 million units projected in 2018, up from 2.1 million in 2013. However NAFTA’s contribution to total FCA sales will decrease, as Europe, Latin America and Asia-Pacific regions will expand previously small volumes.

FCA forecasts European sales growing to 1.5 million units in 2018, up from 1.1 million today, while Latin American deliveries will rise to 1.3 million from 900,000 in 2013.

Asia-Pacific, where FCA has been slower to market than other automakers, should account for 1.1 million of FCA’s 7.0 million 2018 sales. Asia-Pacific only made up 200,000 of total FCA sales in 2013.

Palmer says FCA expects market share in all regions to grow due to new-product launches and added manufacturing.

In the U.S., FCA projects a 15.0% market share by 2018, up from 11.4% in 2013.

“I feel very comfortable (all of our) market-share assumptions are doable,” FCA CEO Sergio Marchionne tells media during a question-and-answer session following the release of financial projections.

Capital expenditures and R&D spending is seen peaking in the 2014-2018 period in 2016, with nearly €13 billion ($18.1 billion) planned to be spent on product programs and upgrading of manufacturing facilities, including the renewal of paint facilities within the NAFTA region.

FCA plans to reduce its industrial debt from €9.7 billion ($13.5 billion) in 2013 to €500 million-€1.0 billion ($696 million-$1.4 billion) in 2018, with positive cash generation seen coming after 2016.

The plan to reduce debt assumes ring-fencing on Chrysler’s balance sheet is removed in 2016 via early repayment of Chrysler bonds. FCA could repay the bonds using cash on its balance sheet, Palmer says, although that depends on an assessment of the level of liquidity Chrysler would need at that time.

FCA plans to complete its long-awaited listing on the New York Stock Exchange by the end of 2014 and currently is beginning the first steps toward that goal by obtaining board and shareholder approval.

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