The name of the game is survival! *

Transcription

1 The name of the game is survival! * * Martin Bisang Bank AM Bellevue Investor Seminar Flims January 17, 2009 Bank AM Bellevue Investor Seminar 1

2 Casting an eye over Fiat s performance in 2008 An intense but difficult year Despite unprecedented challenges......we are expecting to post the best annual profitability ever consecutive quarterly year-over-year improvements since 2004 at Sep YTD...we continued to work hard over the year to improve our competitiveness and efficiency... Rejuvenating our product portfolio Improving industrial processes Strengthening image of our brands Enlarging our network of alliances Accelerating international expansion...we gained market share in most sectors and regions... FGA: Italy at 31.9% (+0.6 p.p.); WE at 8.2% (+0.2 p.p.) increasing penetration in some key markets; market leadership maintained in Brazil; LCV gaining shares both in Italy and WE CNH: gains in both tractors & combines in a strong Brazilian market, in North America for 40+hp tractors and in many Rest-of-World markets for tractors...we quickly and decisively implemented a variety of organizational and operational measures to contain impact of slowdown in demand in most of our sectors Bank AM Bellevue Investor Seminar 2

3 ...and we are prepared for an uncertain 2009 Bank AM Bellevue Investor Seminar 3

4 Car demand forecasts are sliding global automotive sales revised down to -15% (from -10%); Western European sales expected to decline 20% (previously 15%) Bank AM Bellevue Investor Seminar 4

5 ...durable goods suffer the most in downturns... US: Average Annual Growth by industry, downturns vs. recoveries Based on value added by industry Recovery (Avg growth: 1981, 1983, 1992, 2002) 25% 20% 15% 10% 5% 0% -5% Motor vehicles Nonmetallic minerals Primary metals Machinery Durables Chemicals Apparel and leather Paper Nondurables Utilities Publishing Downturn (Avg growth: 1980,1982, 1991, 2001) Air transport Retail trade Wholesale GDP Hotels, rest Arts Information Health care Real estate Food & beverages -10% -20% -15% -10% -5% 0% 5% Mining Non durables do worse in the downturn but better in the recovery. Exception, food and beverages do better in the downturn and worse in the recovery; apparel does worse all round Durables do worse in the downturn and move with GDP in the recovery. Notable exception, motor vehicles: much worse in the downturn, but much better in the recovery Source: Global Insight Bank AM Bellevue Investor Seminar 5

6 ...but AG industry drivers don t look so bad Global Stocks-to-Use Ratios (in $/MT) Global Commodity Prices 40% Corn Soybeans Wheat $500 Corn Soybeans Wheat $450 35% $400 30% $350 $300 25% $250 20% $200 $150 15% $100 10% '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08F '09F '10F '11F '12F '13F $50 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08F '09F '10F '11F '12F '13F US AG Commodity Exports (US$ bn) US Net Farm Income $100 $80 $100 $90 Net Income Farm 2008 Forecast $87bn $80 $60 $40 $70 $60 Average of last 10 Years $50 $20 $40 $0 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08F '09F '10F '11F '12F $30 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08F '09F '10F '11F '12F Source: IHS Global Insight (2008) Bank AM Bellevue Investor Seminar 6

7 GDP forecasts US and Euro Area Quarterly % change, annualized : 1.2% : 0.8% : -2.2% : -1.7% Source: US BEA, CBO, Eurostat, GS, Fondazione Giovanni Agnelli Bank AM Bellevue Investor Seminar 7

8 2009 market developments Uncertain financing environment and lack of customer confidence make it difficult to shape demand curve for 2009 Normal trading conditions are not expected in 2009, especially H1 Substance of plan not impacted by temporary deviations expected in 2009 except for Re-entry in US market for Alfa Romeo postponed to 2011 Postponement of 300k sales target in China (50k units expected in 2010) If normality restores by the end of 2009, Group confirms its 2010 objectives Bank AM Bellevue Investor Seminar 8

9 Fiat s response for 2009 Disciplined approach to balance supply with demand Temporary production shutdown as required by market conditions Non-renewal of temporary workers upon contract maturity Continued push on technical & purchasing savings Expected net savings in 2009 vs Continuous improvement to maximize competitiveness through World Class Manufacturing Governance cost reduction to match market conditions ~15% cut in SG&A Capex reduction through postponement of selected initiatives without penalizing priority of strengthening market positioning Intensifying inventory management to right-size levels Bank AM Bellevue Investor Seminar 9

10 The power of Fiat Group Brands unbundled and image strengthened across the board Product diversification Geographic diversification Key functions at Group level Philosophy constant change Bank AM Bellevue Investor Seminar 10

11 CNH Recapturing brand spirit Powerful, great tradition, strong American heritage Innovative, application specialist in harvesting, value-for-money equipment American, traditional, full-line provider EU full-liner, NA light-tomid specialist, providing solid value for money Bank AM Bellevue Investor Seminar 11

12 Iveco Targeting core customers & segments Product range fully rejuvenated Gaining ground in historically weak heavy segment Quality in line with best competitors Brand enhancement leveraging on communication initiatives Bank AM Bellevue Investor Seminar 12

13 FPT Leading-edge technologies for a decade Pioneering introduction of Common rail & AMT New LCV 2.3 & 3.0L Flex engine in Brazil Tetra-fuel engine CNG engine 1.4 T-Jet 1.8 GDI 1.9 JTD Turbo Twin-Stage...and new products ready in 09 Multiair technology on Fire Engine New Small Engine (SGE) 0.9 liter twin-cylinder Naturally aspirated & turbocharged Multiair engines (65-110hp range) 50% emissions reduction CO 2 consumption down ~25% with greatly improved fun-to-drive Bank AM Bellevue Investor Seminar 13

14 FGA Distinctive market positioning Distinctiveness Distinctiveness Affordability Affordability Distinctiveness Affordability (Europe) Bank AM Bellevue Investor Seminar 14

15 Rethinking model to reverse trend Bank AM Bellevue Investor Seminar 15

16 A quality-of-life discussion for the auto industry A draconian view Sub-critical stand-aloners no longer sustainable A shared machine crucial to survive At least mn units a year needed to make money Maximum expansion of volume base for each architecture Accelerating pace of new partnerships within a couple of years A 3-layer industry expected Wal-Mart players grouped into 6 clusters Limited number of upscale players Few Neiman Marcus exclusive players Bank AM Bellevue Investor Seminar 16

17 New consumer trends New emerging consumer trends show 3 main characteristics Focus to simplicity and sustainability Search for genuine substance Technology expressed in terms of freedom of action These trends involve up to 80% of WE consumers and influence car demand Simple, no frills and low consumption cars Adaptability and customization Non conventional expression of personality Expected market trend * Compact cars: 10+% growth driven by A & Small MPV segments Low-cost middle cars: 20+% growth * Global Insight estimates (2015 vs. 07) Bank AM Bellevue Investor Seminar 17

18 The low-cost brand A natural extension of our market coverage This generation will be the first to live not as well than previous one We have to offer hyper-accessible products even in mature markets What does low-cost mean for us A fresh, simple, stylish, and sustainable brand Three key needs to meet: urban mobility, space for family and space for work Rethinking product but also whole value chain (from material procurement to vehicle scrappage) Mid-term volume target: 300k units a year A compact car as first model to hit the streets Bank AM Bellevue Investor Seminar 18

19 Sustainability becoming increasingly important Bank AM Bellevue Investor Seminar 19

20 Values add value Fiat is quite well positioned within the automotive sector in terms of overall sustainability performance and is in the process of emerging as a sustainability leader although the competition within the sector remains tough Sam Research (DJSI rating agency) Sep 2008 Sustainability for Fiat Group is a strategic choice integrated in the core business and a pillar of our long-term success Areas of excellence Fiat Brand had the lowest emissions in EU (among the 10 top selling brands in 2007) and is committed to have the lowest CO 2 emissions in 2012 Environment Management System at all Group plants; more than half of our plants involved in WCM program (12 now at bronze level) Fiat 500: the first 3.6 m vehicle in the world with 5 Euro NCAP stars The biggest Customer Services Centre in EU Autonomy: since 1995 a complete range of models for people with driving constraints Bank AM Bellevue Investor Seminar 20

21 Fiat s 5 core principles... We are a meritocracy Leadership is a function of leading change and leading people We embrace and relish competition We aim to achieve best-in-class performance We deliver what we promise Bank AM Bellevue Investor Seminar 21

22 ...will allow us to emerge stronger in 2009 Toughest year ever Will test all our leadership skills Will require interplay of industry and governments with shared objectives Will significantly change landscape of automotive sector, forever And Fiat will play a (significant) role Bank AM Bellevue Investor Seminar 22

23 Safe Harbor Statement Certain information included in this document is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially. The Company's businesses include its automotive, automotive-related and other sectors, and its outlook is predominantly based on its interpretation of what it considers to be the key economic factors affecting these businesses. Forward-looking statements with regard to the Group's businesses involve a number of important factors that are subject to change, including: the many interrelated factors that affect consumer confidence and worldwide demand for automotive and automotive-related products; factors affecting the agricultural business including commodities prices, weather, and governmental farm programs; general economic conditions in each of the Group's markets; legislation, particularly that relating to automotive-related issues, agriculture, the environment, trade and commerce and infrastructure development; actions of competitors in the various industries in which the Group competes; production difficulties, including capacity and supply constraints and excess inventory levels; labor relations; interest rates and currency exchange rates; political and civil unrest; and other risks and uncertainties. Any forward-looking statements contained in this document are referred to the current date and, therefore, any of the assumptions underlying this document or any of the circumstances or data mentioned in this document may change. Fiat S.p.A. expressly disclaims and does not assume any liability in connection with any inaccuracies in any of these forward-looking statements or in connection with any use by any third party of such forward-looking statements. This document does not represent investment advice or a recommendation for the purchase or sale of financial products and/or of any kind of financial services. Finally, this document does not represent an investment solicitation in Italy, pursuant to Section 1, letter (t) of Legislative Decree no. 58 of February 24, 1998, or in any other country or state. Bank AM Bellevue Investor Seminar 23

24 Contacts Fiat Investor Relations team Marco Auriemma phone: Vice President Vincenzo Torrisi phone: Federico Donati phone: Maristella Borotto phone: fax: website: Bank AM Bellevue Investor Seminar 24