FIAT SpA CEO Discusses Q4 2010 Results - Earnings Call Transcript

FIAT SpA, (FIATY.PK)

Q4 2010 Earnings Call

January 27, 2011 10:00 am ET

Executives

Marco Auriemma – IR

Sergio Marchionne – CEO and CEO, FIAT Automobiles

Camillo Rossotto – Group Treasurer

Analysts

Monica Bosio – Banca IMI

Martino De Ambroggi – Equita

Thierry Huon – Exane BNP Paribas

Brian Johnson – Barclays Capital

Ranjit Unnithan – JPMorgan

Stuart Pearson – Morgan Stanley

Max Warburton – Sanford C. Bernstein

Presentation

Operator

Good afternoon, ladies and gentlemen and welcome to today’s FIAT Group 2010 Fourth Quarter and Full Year Results Conference Call. For your information, today’s conference is being recorded.

At this time I would like to turn the call over to Marco Auriemma, Head of FIAT Investor Relations. Mr. Auriemma, please go ahead sir.

Marco Auriemma

Thank you, Bettina. Good afternoon to you or good morning as the case may be and welcome to FIAT Group 2010 fourth quarter and full year results webcast and conference call, the last quarterly analyst call for the group. The Chief Executive, Sergio Marchionne together with Antonio Pica Piccon and Camillo Rossotto, the newly appointed treasurers respectively for FIAT and FIAT Industrial will host today’s call. They will use the material you should have downloaded from our website, fiatspa.com and fiatindustrial.com. Also with us is Manfred Markevitch, the head of the investor relations for both FIAT Industrial and CNH. After the introductory remarks we would be available to answer all the questions you may have.

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

So now I will turn the call over to Sergio Marchionne.

Sergio Marchionne

Thank you for the introduction. As you all know today is the last conference call for the automotive conglomerate that we all knew as FIAT Spa. I think that I am looking forward to a slightly lighter load as we move into 2011. I think that the CEOs of the industrial group will be able to address most of your concerns going forward although I think my presence will still be somehow felt through the process. The important thing is to try and get an understanding of what was accomplished in 2010 and really get a firm understanding of how we are starting our new lives as FIAT and FIAT Industrial.

I am going to ignore making any comments about the title page. I will leave it to you to use your literary interest to find out why we chose the title that we did. And I am also going to skip the first two slides of our presentation which are pure propaganda that relate to the event on January 3 when we started trading in the two securities of FIAT.

Page four deals in a very clear way with what I think we were able to accomplish in 2010 for FIAT not only much common about the revenue side. We are going to deal with these as we go through the sectors but the important thing is from a trading standpoint we committed about EUR2.2 billion, roughly 600 million in net income for the year and probably the most relevant part of this analysis is the fact that we were able to generate a substantial amount of liquidity in the last 12 months. We are now sitting in a net debt position which is substantially below what we indicated as guidance as little as 3 months ago. We are sitting now at 2.5 billion worth of net debt; 2.4 billion of which 0.5 billion is sitting with FIAT with the car side and 1.9 starting with – is the starting position of FIAT Industrial.

Net cash is about EUR16 billion, most of that cash over 12 billion is now sitting with FIAT. There is a comment that somewhere in the slides going forward saying that there was an amount of intercompany debt that existed as of January 1, 2011 which has now been extinguished because the – a number of lines has been drawn down to repay the indebtness as a result of that repayment. The actual cash balance of FIAT is about a billion higher as we have performed the transactions of the end of 2010.

So overall a good year I think. I think we are satisfied with the trading performance of the business with all the businesses and I think we are looking forward to an improvement in 2011 performance to the two organizations.

Slide five, the first part deals clearly with what I just talked about the financing of FIAT Industrial. These lines have been drawn. I think that as we mentioned to you as early as April of last year we have intentions of going back into the capital market to provide proper financing of FIAT Industrial as we go forward it is going to be at 2011 and then hopefully within the first half of this year.

Given the performance the board has recommended the dividend is going to cost of about 152 million across the three classes of shares and the other significant event which is one of three events that the other two of which hopefully will materialize in 2011, which is about the ownership of FIAT into Chrysler from 20 to 25%.

Slide six, standard reconciliation of operating profit down to net income. Obviously the financial charges are relatively high. This is the price that we are paying for the high levels of liquidity that we have maintained in 2010. The financial charges are also net of a one-time gain of EUR111 million which relates to the mark to market of the equity swaps that are associated with stock options plans of FIAT. Both options will continue to stay on FIAT SpA’s books on (inaudible) exercised or otherwise dealt where they will continue to impact the performance of FIAT SpA’s results.

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