FCA: 2017 Second Quarter Results

FCA reports record second quarter Adjusted EBIT of €1.9 billion, up 15%, margin up 90 bps to a record 6.7%; Adjusted Net Profit up 52% to €1.1 billion and Net Profit more than tripled to €1.2 billion. Full- year guidance is confirmed.‌‌‌

• Worldwide combined shipments(1) of 1,225 thousand units, down 1%

• Net revenues of €27.9 billion, in line with Q2 2016 (down 2% at constant exchange rate, or CER)

• Adjusted EBIT of €1,867 million, up 15%, mainly driven by Maserati with all segments profitable

• Record Group margin of 6.7%. All segments improved margins with record NAFTA margin at 8.4% and Maserati at 14.2%

• Adjusted net profit of €1,080 million, up 52%; Net profit of €1,155 million, up 260%

• Net industrial debt of €4.2 billion, down €0.9 billion from Q1 2017, driven by cash flow from operations

• Liquidity strong at €20.0 billion, after planned gross debt reduction of €1.4 billion in quarter

  Six months ended June 30 FINANCIAL RESULTS Three months ended June 30

  2017 2016 Change (€ million, except as otherwise noted) 2017 2016 Change

  2,370	2,364 6 - % Combined shipments(1) (thousands of units)	1,225	1,233 (8) (1)%
  2,216	2,261 (45) (2)% Consolidated shipments(1) (thousands of units)	1,138	1,175 (37) (3)%
  55,644	54,463 1,181 +2 % Net revenues	27,925	27,893 32 - %
  3,402	3,007 395 +13 % Adjusted EBIT(2)	1,867	1,628 239 +15 %
  1,796	799 997 +125 % Net profit	1,155	321 834 +260 %
  1,751	1,237 514 +42 % Adjusted net profit(2)	1,080	709 371 +52 %
  1.149	0.502 0.647 Diluted earnings per share (EPS) (€)	0.737	0.199 0.538
  1.120	0.783 0.337 Adjusted diluted EPS(2) (€)	0.689	0.448 0.241

  At June 30,

  2017

  At December

  31, 2016 Change

  At June 30,

  2017

  At March 31,

  2017 Change

  (4,226)	(4,585) 359 Net industrial debt(2)	(4,226)	(5,112) 886
  (19,140)	(24,048) 4,908 Debt	(19,140)	(21,156) 2,016
  19,953	23,801 (3,848) Available liquidity	19,953	21,576 (1,623)

  ADJUSTED EBIT ADJUSTED NET PROFIT

  • Delivered record Q2 results with improvements in Maserati, LATAM, EMEA and Components, and continued strong performance in NAFTA

  • Group margin up 90 bps to record 6.7%

  • Maserati margin more than doubled to 14.2% from 6.2%

  • NAFTA margin up 50 bps to record 8.4%

  • Increase driven by strong operating performance

  • Net financial expenses of €369 million, down €122 million primarily as a result of ongoing gross debt reduction

  • Reduced tax rate reflects changes in the quarter to prior years' tax positions and improved performance in EMEA and LATAM

  • Excludes net positive impact of €75 million, primarily related to the reversal of a Brazilian indirect tax liability, net of related tax effects, as well as the write-off of certain deferred tax assets in Brazil

    NET INDUSTRIAL DEBT 2017 GUIDANCE(3)

  • Decrease of €0.9 billion, mainly driven by €2.9 billion cash flows from operations, partially offset by capital expenditures of €2.2 billion

  • Available liquidity remained strong at €20.0 billion, down €1.6 billion from March 2017, primarily reflecting €1.4 billion planned gross debt reduction

    The Group confirms full-year guidance:

  • Net revenues €115 - €120 billion

  • Adjusted EBIT > €7.0 billion

  • Adjusted net profit > €3.0 billion

  • Net industrial debt

    (1) Combined shipments include all shipments by the Group's unconsolidated joint ventures, whereas consolidated shipments only include shipments from the Group's consolidated subsidiaries; (2) Refer to page

    6 for reconciliations of Net profit to Adjusted EBIT, Net profit to Adjusted net profit and Diluted EPS to Adjusted diluted EPS and page 7 for the reconciliation of Debt to Net industrial debt; (3) Guidance is not provided on the most directly comparable IFRS financial statement line item for Adjusted EBIT and Adjusted net profit as the income or expense excluded from these non-GAAP financial measures in accordance with our policy are, by definition, not predictable and uncertain.

    Results by segment

    Net revenues and Adjusted EBIT

    Net revenues Adjusted EBIT

    Three months ended June 30 Three months ended June 30

    2017 2016 (€ million) 2017 2016

    16,081	17,479 NAFTA	1,351	1,374
    2,011	1,469 LATAM	60	-
    976	957 APAC	44	42
    6,010	5,770 EMEA	200	143
    1,074	579 Maserati	152	36
    2,654	2,430 Components (Magneti Marelli, Comau, Teksid)	130	111
    (881)	(791) Other activities, unallocated items and eliminations	(70)	(78)
    27,925	27,893 Total	1,867	1,628

    2017	2016	Actual	CER
    (14)%	-

    NAFTA Three months ended June 30 Change

    Shipments (thousands of units)	576	666
    Net revenues (€ million)	16,081	17,479 (8)% (10)%
    Adjusted EBIT (€ million)	1,351	1,374 (2)% (4)%
    Adjusted EBIT margin	8.4%	7.9% +50 bps -

    Record margin at

  • U.S. market share

    (4)

    at 12.4% in line with Q1 2017, down 30 bps year over year, mainly reflecting

    8.4% driven by favorable mix with lower volumes

    discontinuance of Chrysler 200, Dodge Dart and Jeep Patriot

  • Decrease in shipments primarily due to planned capacity realignment and the transition to the all- new Jeep Compass

  • Decrease in Net revenues mainly due to lower shipments, partially offset by favorable vehicle mix and positive foreign exchange translation

  • Decrease in Adjusted EBIT mainly due to lower Net revenues and prior year one-off residual values adjustment, substantially offset by lower warranty costs including supplier recoveries, purchasing savings and reduced advertising costs

    (4) Our estimated market share data presented are based on management's estimates of industry sales data, which use certain data provided by third-party sources, including IHS Markit and

    2017	2016	Actual	CER
    +18%	-

    LATAM Three months ended June 30 Change

    Shipments (thousands of units)	132	112
    Net revenues (€ million)	2,011	1,469 +37% +24%
    Adjusted EBIT (€ million)	60	- n.m.(5) n.m.(5)
    Adjusted EBIT margin	3.0%	-% n.m.(5) -

    New products

  • Market share

    (6)

    slightly down in Brazil at 17.6% with improvement in Argentina from 11.5% to 12.6%

    driving higher volumes and improved mix

  • Increase in shipments mainly due to the all-new Jeep Compass

  • Net revenues increase due to higher shipments, favorable vehicle mix and favorable foreign exchange translation effects

  • Adjusted EBIT increase mainly as a result of higher Net revenues, partially offset by increased product cost driven by inflation

  • Adjusted EBIT excludes total charges of €93 million, of which €40 million relates to workforce restructuring costs and €53 million of asset impairment charges primarily related to the early discontinuance of Fiat Novo Palio production and certain real estate assets in Venezuela

    During the quarter, the Group reversed a liability of €895 million for Brazilian indirect taxes reflecting recent court decisions. As this liability related to the Group's Brazilian operations in multiple segments and given the significant and unusual nature of the item, it was not attributed to the results of the related segments and was excluded from Group Adjusted EBIT.

    There was a corresponding €281 million decrease in deferred tax assets related to the release of the above liability. Additionally, due to increased political uncertainty in Brazil, a slower pace of economic recovery is anticipated. As a result, deferred tax assets of €453 million were written-off. These items are excluded from Group Adjusted net profit.

    2017	2016	Actual	CER
    43 %	-

    APAC Three months ended June 30 Change

    Combined shipments(1) (thousands of units)	80	56
    Consolidated shipments(1) (thousands of units)	22	23 (4)% -
    Net revenues (€ million)	976	957 +2 % +2%
    Adjusted EBIT (€ million)	44	42 +5 % +5%
    Adjusted EBIT margin	4.5%	4.4% +10 bps -

    Jeep drives 43% increase in combined shipments, Alfa Romeo launched in China

  • Higher combined shipments driven by ramp-up in localized Jeep production through JV in China

  • Net revenues increase primarily as a result of favorable vehicle mix; consolidated shipments stabilizing

  • Adjusted EBIT slightly up due to higher Net revenues and improved results from JV in China, partially offset by commercial launch activities related to Alfa Romeo and negative foreign exchange transaction effects

    Shipments (thousands of units)	395	367
    Net revenues (€ million)	6,010	5,770 +4% +5%
    Adjusted EBIT (€ million)	200	143 +40% +38%
    Adjusted EBIT margin	3.3%	2.5% +80 bps -

    Continued

  • European market share (EU28+EFTA) for passenger cars up 40 bps to 7.2% (down 20 bps to 29.0% in

    (7)

    improvement in

    Italy) and up 20 bps to 13.2% for light commercial vehicles (LCVs)

    (41.1% in Italy, down from 43.9%)

    performance with Adjusted EBIT margin up 80 bps

  • Increase in shipments primarily driven by Fiat Tipo family and all-new Alfa Romeo Giulia and Stelvio

  • Net revenues increase due to higher volumes, driven by the Fiat Tipo family, partially offset by negative net pricing, including devaluation of GBP

  • Adjusted EBIT increase primarily from higher Net revenues as well as purchasing and manufacturing efficiencies

    2017	2016	Actual	CER
    +91%	-

    MASERATI Three months ended June 30 Change

    Shipments (thousands of units)	13.2	6.9
    Net revenues (€ million)	1,074	579 +85% +86%
    Adjusted EBIT (€ million)	152	36 +322% +331%
    Adjusted EBIT margin	14.2%	6.2% +800 bps -

    Fourth consecutive quarter of double- digit margin

  • Shipments nearly doubled, driven by all-new Levante; increases in all major markets: Europe +93%, China +146% and North America +50%

  • Net revenues increase primarily due to higher shipments

  • Adjusted EBIT increase primarily due to increase in Net revenues

    2017	2016	Actual	CER
    +9%	+8%

    COMPONENTS (Magneti Marelli, Comau and Teksid) Three months ended June 30Change

    Net revenues (€ million)	2,654	2,430
    Adjusted EBIT (€ million)	130	111	+17%	+16%
    Adjusted EBIT margin	4.9%	4.6%	+30 bps	-

    Improved performance from all businesses, with margin up 30 bps

  • Net revenues increase driven by higher volumes across all three businesses

  • Adjusted EBIT increase mainly due to higher Net revenues and industrial efficiencies

  • Magneti Marelli non-captive Net revenues at 65% and Comau at 72%

  • Adjusted EBIT excludes charges of €42 million, primarily related to resolution of certain long-standing legal matters