Fiat Industrial S.p.A (



Q3 2011 Earnings Conference Call

October 28, 2011 12:00 PM EST


Manfred Markevitch – Head, IR

Sergio Marchionne – Chairman

Camillo Rossotto – Group Treasurer

Harold Boyanovsky – President and CEO, CNH

Alfredo Altavilla – CEO, Iveco

Giovanni Bartoli – CEO, FPT Industrial



Martino De Ambroggi – Equita

Jochen Gehrke – Deutsche Bank

Alberto Villa – Intermonte

Yann Benhamou – Exane

Max Warburton – Bernstein



Good afternoon, ladies and gentlemen, and welcome to today’s Fiat Industrial 2011 third quarter results conference call.

For your information, today’s conference is being recorded.

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At this time, I’d like to turn the conference over to Mr. Manfred Markevitch, Head of Fiat Industrial Investor Relations. Mr. Markevitch, please go ahead, sir.

Manfred Markevitch

Thank you, Casey. Good afternoon, afternoon. I would like to welcome you to the Fiat Industrial third quarter 2011 results webcast conference call.

Fiat Industrial Chairman, Mr. Sergio Marchionne, with Harold Boyanovsky, President and CEO of CNH; Alfredo Altavilla, CEO of Iveco; Giovanni Bartoli, CEO of FPT Industrial; and Camillo Rossotto, Group Treasurer, will host today’s call. They will use the material you should have downloaded from our website on

After introductory remarks, we will be available to answer the questions you may have.

Before moving ahead, let me just remind you that any forward-looking statements we might be making during today’s call are subject to the risk and uncertainties mentioned in the Safe Harbor statements included in the presentation material.

I would now turn the call over to Mr. Sergio Marchionne.

Sergio Marchionne

Thanks very much and good afternoon. This is the third of series of analyst calls that we’ve had since this afternoon. We’ve dealt with the car side for most of the afternoon. It’s time to move on for something which is at least structurally less problematic than making cars.

I’m going to make a couple of general remarks and I’ll pass it on to my colleagues here who can explain to you what happened by sector and then have Camillo certainly deal with the financial structure.

Overall, I think it’s been a great quarter. We’ve had the best third quarter for CNH in its history since inception. And it’s a good sign, I think, that we’re making significant process in improving the profitability of this business. It’s been at the heart of a lot of efforts that started way back in 2005 and they’re beginning to bear fruit. We still have a long way to go. We’ve been helped by relatively buoyant market certainly on the Ag side and by our recovering position in construction. But fundamentally we are pleased with the performance to date. And I think that the rest of the year looks promising and it gives us some comfort of the fact that we can get to the trading profit target and undoubtedly exceed it for 2011.

The truck side is also recovering. I think Alfredo has done a great job of trying to deal with some of the industrial inefficiencies within the system. There is a process that’s now underway in which will unfold as the rest of 2011 and 2012 progress. But the indications are good. I think that the prospects also for 2012 for both of those businesses are good and certainly in line with the guidance that we provided back in 2010 as part of the five-year plan.

The FPT side is also improving. We promised you on the last call that we will give you an idiots’ proof version of the margin development for this business. Hopefully, it will become clear at the end of this call as to how we intend to move margins up substantially from where we are today.

And the other thing that we have done which is certainly in line with the attempt to try and modernize a streamline governance here is to eliminate the three classes of shares. As a result of the demerger that we have inherited from Fiat, it’s time to move on from that structure. The proposal that we’re making is one that reflects the proper premium against the historical trading prices of both the savings and the preferred shares. I’ve threatened Camillo with physical violence if he tries to complicate the description of this process beyond a reasonable limit. I will step in the event that [inaudible] comes off the rails, but it’s a relatively simple process that requires the majority vote of a minimum number of attending shareholders of the two separate class of shares. So it’s something that we plan on doing as we hold the AGM next year either in March or of April of 2012, but it certainly should simplify life going forward for all concerned.

On that note, I’ll pass it on to Camillo, and he will handle at least the first few slides.

Camillo Rossotto

Thank you, Mr. Marchionne. Good evening, everybody.

So I would start with slide two. Going through this scorecard for the quarter, revenue is up 12% to EUR5.9 billion, trading profit up EUR154 million, and trading margin very importantly up 200 basis points versus the third quarter of last year. That translates into an improvement in net result and the net debt increase that we see on this slide from EUR1.7 billion to EUR1.9 billion, I’m going to deal with that in the cash flow section of the presentation.

Well, on this slide, I think it’s worthwhile remarking that the EUR4 billion of cash plus EUR1.6 billion in available liquidity is sort of an unchanged position versus the end of September slightly improved – versus the end of June, sorry. Guarantees, they were in a position extremely comfortable vis-à-vis the maturities of our debt. With this amount of cash on hand, we’re able to cover all the future maturities with the end of 2014 in the assumption of not our overall bank debt.

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