Solid businesses deliver a solid Q2: A firm rebound out of the lows Q2 & H1 10 Results Review

Transcription

1 Solid businesses deliver a solid Q2: A firm rebound out of the lows Q2 & H1 10 Results Review July 21, 2010 Q2 & H1 10 Results Review 1

2 Q2 10 highlights Strong top- and bottom-line performance with all businesses up Y-o-Y Group revenues up 12.5% to 14.8bn reflecting stronger trading across all businesses, in particular for CNH, Iveco and Components & Production Systems Automobiles up 6.7% to 7.9bn: FGA at 7.4bn, up 6.4% on recovery in LCVs and favorable currency movements more than compensating for decline in total passenger car volumes following phase-out of eco-incentives in most key European markets CNH at 3.3bn, up 16% (9.4% in US$ terms) with positive performances in the Americas and RoW markets more than offsetting weak conditions for AG in Europe, CIS states and Australia Iveco at 2.1bn up 18.3% with demand increased in all markets and segments, but significantly below level Components & Production Systems business up substantially on the back of increased production activity in global automotive sector Trading profit more than double to 651mn ( 310mn in Q2 09) driven primarily by volume increases, improved sales mix and continued cost discipline with notable Y-o-Y performance for CNH & FGA Automobiles at 270mn up ~19%: FGA at 185mn up 19.4% on better sales mix, primarily linked to LCVs CNH at 263mn, more than doubled vs. same period last year with both AG & CE experiencing stronger performance Iveco at 50mn ( 18mn last year) with progressive recovery Components & Production Systems business recovered from a negative operating performance in Q2 09 to an 86mn trading profit Group trading margin at 4.4% (2.4% in Q2 09) Return to bottom-line profitability with net profit of 113mn ( 179mn loss last year) July 21, 2010 Q2 & H1 10 Results Review 2

3 Q2 10 highlights (cont d) Net industrial debt decreased by 1bn in the quarter to 3.7bn ( 4.7bn at Q1-end) Strong trading performance and reduction in working capital attributable to higher activity levels Liquidity further strengthened at 13.5bn ( 11.2bn at Q1-end) due to strong cash flow from operations and proceeds from US$1.5bn CNH bond issuance in June Executed first-step to implementation of Fabbrica Italia project Agreement signed with 4 out of 5 Unions to allocate production of Future Panda at Giambattista Vico plant Stipulated terms and conditions essential to Fiat maintaining its commitment to realization of the project Preparatory activities related to demerger on track as planned Fiat Board of Directors have approved the transaction and have authorized calling of EGM on Sep 16, 2010 Closing expected by year-end FY guidance remains unchanged, but will probably be revised upwards on the basis of Q performance July 21, 2010 Q2 & H1 10 Results Review 3

4 Q2 10 Revenues and trading profit by business Revenues ( mn) 3,511 Automobiles 7,927 3, % 2, % 35.2% (2,016) 14, % FGA: improved sales mix, purchasing savings and favorable currency movements partly offset by a WE decline in passenger car volumes Ferrari: improvement attributable to higher sales revenues benefitting from positive contribution of new F458 Italia & F599 GTO Maserati: increase in sales attributable to outstanding performance for both Quattroporte and new GranCabrio FGA 7, % 6.7% Maserati % Ferrari % CNH Automobiles CNH IVECO Components Eliminations & Others Trading profit ( mn) % x x FGA % Maserati 8 +4x Ferrari % x (18) Automobiles CNH IVECO Components Eliminations & Others Q x Q2 10 Benefitted from strong recovery in demand in several key regions Stronger performance on higher volumes, better pricing and lower industrial costs, benefiting also from reduction in restructured cost Iveco base in CE Increase in sales volumes coupled with production efficiencies Components & Production Systems FPT: 79mn swing in profitability over Q2 09 primarily attributable to recovery in sales volumes, as well as purchasing and manufacturing efficiencies Other components businesses all positive (combined profit up 4x last year level) on double-digit top line growth July 21, 2010 Q2 & H1 10 Results Review 4

5 Q2 & H1 10 From trading to net result ( mn) Q2 H1 '10 '09 '10 '09 Trading profit , Unusual items, net (23) (152) +129 (23) (233) +210 Operating income Financial charges, net (301) (161) -140 (551) (371) -180 Investment income, net 47 (13) (34) +136 Pre-tax result 374 (16) (376) +907 Taxes (261) (163) -98 (439) (214) -225 Net result 113 (179) (590) +682 Unusual items, net consisting primarily of restructuring costs Financial charges, net includes: Loss of 19mn (Q2 10) / 32mn (H1 10) on two stock-option related equity swaps (a gain of 39mn in Q2 09 / 53mn in H1 09) One-off charge for the announced early repayment of a CNH bond (original maturity in 2014) for 17mn July 21, 2010 Q2 & H1 10 Results Review 5

6 Q2 & H1 10 Cash Flow ( mn) Q2 '10 H1 '10 Net Industrial (Debt)/Cash beginning of period (4,707) (4,418) Net Income D&A (excl. Vehicle Buybacks) 716 1,395 Change in Funds & Others Cash Flow from Op. Activities bef. Chg. in W.C. 1,214 1,724 Change in Working Capital 1, Cash Flow from Operating Activities 2,302 2,564 Tangible & Intangible Capex (excl. Vehicle Buybacks) (810) (1,506) Cash Flow from Operating Activities net of Capex 1,492 1,058 Change in Investments, Scope & Other (354) (255) Net Industrial Cash Flow 1, Capital Increase / Share Repurchases / Dividends (236) (236) FX Translation Effect Change in Net Industrial Debt 1, Net Industrial (Debt)/Cash end of period (3,706) (3,706) Highest Q2 cash generation in history with 1bn net industrial debt reduction after 0.2bn dividend payment Significant working capital reduction on the back of increased activity levels Positive earnings contribution from all businesses Capex broadly in line with D&A July 21, 2010 Q2 & H1 10 Results Review 6

7 Looking at Market forecast & key developments 2. Input costs 3. Cost structure & manufacturing capacity 4. Company outlook 5. Chrysler Group sales performance in the quarter 6. Update on demerger July 21, 2010 Q2 & H1 10 Results Review 7

8 1.1 Industry outlook & sales volume Fiat Group Automobiles 1,085 Passenger cars LCVs 2, Q2 10 (change vs. prior year) FY 10E (change vs. prior year) EU27+EFTA (7.3%) (10%) WE (6.9%) (10%) ITA (16.1%) (12%) BRA (6.1%) +2% EU27+EFTA 11.7% +3% WE 13.3% +5% ITA 1.7% +2% BRA 27.2% +25% >2,000 FY 09 FY 10E Passenger cars Italy WE ex-italy LA RoW LCVs Unit Sales (x000) Q2 10 Passenger Cars (EU27+EFTA) Supportive incentive programs in place in UK & Spain, with mixed but overall positive trend in minor markets unable to counter largely expected drop in demand driven by Germany (33%) and Italy (16%) Dealer inventories slightly increased, but at adequate levels, due to new product launches (Giulietta & Novo Uno) and improved market outlook Integration of sale and service activities of Chrysler, Jeep and Dodge branded products with FGA started in Italy, France, Germany, Sweden, Denmark, Belgium & Netherlands LCVs (EU27+EFTA) Industry recovering from Q2 09 lows, with major markets (ex Italy) up double-digit Fiat Professional share at 13.9% (-0.5 p.p. but increasing vs. Q1 level); strong performance in domestic market (share at 44.4%, +4.3 p.p.) mainly due to introduction of new products (Fiorino & Doblò) Brazil: confirmed market leader; 3 consecutive M-o-M share increase (23.3% share in the quarter) H2 10 expectations EU27+EFTA Passenger cars: market decline to soften (down ~10% in H2) vs. previous forecast, with trend driven by Germany & Italy (~25% in H2); FGA performance in line with segment & market mix LCVs: targeting share increase driven by new products in substantially flat market in H2 Brazil: stable passenger car market, while LCVs up ~20% July 21, 2010 Q2 & H1 10 Results Review 8

9 1.2 Fiat Group Automobiles Passenger Car market share dynamics in Q2 (EU27+EFTA) [Change vs. last year] Share at 7.5% (-1.5 p.p.), with gains in UK & Spain and some minor WE markets partially offsetting negative performance in Italy and Germany -0.5 = Italy: drop in demand largely driven by slump in registrations of CNG (-82%) & LPG (-34%) powered vehicles; FGA share +2.5 p.p. ex alternative-fuel market. Continued careful price management Europe ex-italy: share at 4.0% (-0.7 p.p.) mostly driven by fall of A-segment in Germany Share in Germany back to 08 level after exceptional performance last year due to incentives (Fiat 500 share continuing to increase Y-o-Y) By brand Fiat brand share at 6.1% (-1.3 p.p.) Lancia share at 0.7% (stable at 4.7% in Italy) Alfa Romeo share substantially unchanged, awaiting sales impact of Giulietta July 21, 2010 Q2 & H1 10 Results Review 9

10 1.3 Fiat Group Automobiles New product launches We are such stuff as dreams are made on William Shakespeare Launched in May in centenary year June YTD: ~17k orders taken and ~6k units sold Steady annual volumes target: ~90k Based on upgraded Compact architecture to serve all future C- & D-segment cars of FGA & Chrysler Group Well exceeding 1mn unit mark off Compact architecture by Star Euro NCAP rated, safest compact car ever Innovative engines for exciting, environmentally friendly driving, all fitted with Start&Stop system Commercially available since May 2010, a new icon in segment with unprecedented level of customization From the market to the market design, fully developed in Brazil for sales in all LA markets Very good early market reception (June YTD: ~46k orders taken, ~20k units sold) Brand-new architecture for entry-level A-segment models Premiere of 2 new engines: Fire 1.0 Evo and Fire 1.4 Evo, both Flex-Fuel July 21, 2010 Q2 & H1 10 Results Review 10

11 1.4 FPT Powertrain Technologies Passenger cars Update on technological developments Start of production of TwinAir, world s greenest engine, from mid-june in Bielsko Biala plant (a WCM Silver medal plant) A 0.9L bi-cylinder engine with power ranging hp in aspirated, turbocharged and bi-fuel CNG versions First application on Fiat 500 with just 92 g/km of CO 2 emissions, today s lowest on petrol engine market Investment of ~ 350mn Fast track development of 24 months Max manufacturing capacity of 450k engines per year MultiAir: Engine of the year 2010 award Innovative 4-cylinder engines combining MultiAir with turbocharger, setting new efficiency standards 1.4 Fire MultiAir turbo: power ranging hp, optimizing downsizing concept, now equips Alfa Romeo MiTo & Giulietta, Fiat Punto Evo & Abarth Punto Evo, Fiat Bravo Soon to be introduced on Lancia Delta Up to 10% reduction in fuel consumption and CO 2 emissions (up to 25% in combination with turbocharging & downsizing) while improving performance by 15%...and soon being introduced on Fiat 500 for US version Opening of new industrial facility in Brazil, a ~20% addition to FPT installed capacity in Mercosur (reaching now a potential production of 2.5mn powertrains per year) Largest and most modern midsize engine plant in LA Invested R$250mn since acquisition of Tritec Motors in 2008 Initial production capacity of 330k engines per year, set to reach 400k in 2012 Manufacturing of E-TorQ engine family (1.6l 16v and 1.8l 16v flex-fuel and gasoline versions) serving for both domestic and export supply Aiming at 95% of locally supplied components in 2011 (now at ~90%) July 21, 2010 Q2 & H1 10 Results Review 11

12 1.5 Industry outlook & sales volume CNH Agricultural Equipment Q2 10 Global industry down 4% NA: improved industry sales driven by growth in <40hp tractors Industry (change vs. prior year) Q2 10 FY 10E CNH (performance relative to mkt) Industry (change vs. prior year) WW (4)% Flat NA 3% 0-5% WE: weak general economic environment negatively impacting industry sales LA: continued strength in AG market, with Brazilian tractor market up 55% RoW: sustained demand for combine only partially offsetting slowdown in tractor sales Tractors <40hp 6% 0-5% 40+hp (2)% Flat CNH market share Tractor share flat WE (16)% (10-15)% LA 39% 20-25% RoW (7)% (0-5)% WW (6)% (0-5)% Gaining market share in RoW driven by Asia, Africa & Middle East In NA CNH is transitioning to new more competitive products in the <40hp and utility segments but stable in high hp tractor segments Combines NA FLAT 0-5% WE (35)% (25-30)% Significant combine share gains in all regions except WE LA 41% 25-30% FY 10 expectations RoW 10% (10-15)% Global AG market demand flat vs. last year LA expected to remain strong Continued weakness in WE stemming from uncertain macro conditions Steady to positive outlook for NA July 21, 2010 Q2 & H1 10 Results Review 12

13 1.6 Industry outlook & sales volume CNH Construction Equipment Q2 10 Q2 10 FY 10E Overall industry up 60%, consolidating positive trend started in Q1 and off Light Industry (change vs. prior year) CNH (performance relative to mkt) Industry (change vs. prior year) WW 38% 20-25% NA 15% 5-10% WE 20% 0-5% abnormally low base for prior year LA: continued strong demand compared to a low base in comparable period for both Light & Heavy equipment RoW: expansion derived from growth in APAC region, mainly China LA 105% 60-65% CNH market share relatively in line RoW 64% 30-35% worldwide, with gains in Heavy equipment WW 82% 30-35% in WE NA 8% 0-5% FY 10 expectations Heavy WE 9% Flat Worldwide industry demand for Light & LA 155% 60-65% Heavy Equipment up 25 30% RoW 103% 40-45% Construction activity up in LA & RoW regions lead to global industry growth July 21, 2010 Q2 & H1 10 Results Review 13

14 1.7 CNH developments CNH Agricultural & Construction Equipment New Sorocaba plant began production in the quarter Designed to meet robust Brazilian demand Production capacity of 8k units per year, with localized production up significantly in the region ~100 tractor units produced in Q2, combine production commencing in Q3 Completion of Commercial JV with Kamaz (Russia) in May CNH 51% Kamaz 49% structure providing base for CNH to build local distribution Russia demand slow due to tight credit conditions, however combines and CE sales growing in the quarter compared to 2009 Industrial JV (50-50) began local assembly of New Holland Agriculture high hp 4WD T9000 and row crop T8000 tractor series and CSX combine harvesters in April July 21, 2010 Q2 & H1 10 Results Review 14

15 1.8 Industry outlook & sales volume Iveco (Trucks) Light Medium Heavy Industry ( 3.5T) (change vs. prior year) Q2 10 FY 10E WE +4.5% +5-7% EE Flat Flat LA +40% >15% Q2 10 WE market: initial sign of recovery in Trucks & Commercial Vehicles but still at very low levels Light (+10%); Medium (-9%); Heavy (-3%) LA market: strong performance driven by Brazil (up 60+%) Light (+25%); Medium (+47%); Heavy (+76%) Iveco Order intake up 43% (+35% in WE) vs. Q2 09: Light +37%; Medium +43%; Heavy +71% Overall share in 3.5T WE market up +0.2 p.p. driven by gains in Light (+0.5 p.p.) LA market share flat, with gains in Medium & Heavy segments mainly due to new versions of Stralis (Rating & Cursor engine application) Unconsolidated sales in China up significantly: Light up 27% to ~21k, Medium & Heavy up 52% to ~11k and Light Bus up 57% to ~9k FY 10 expectations Industry WE: FY outlook improved due to faster recovery in Northern Europe & Light segment markets (material recovery in Medium & Heavy still uncertain) Growth continuing for rest of the year in LA, but at slower pace than H1 Iveco: FY segment shares at Q2 level in WE with careful price management; expected constant Q-o-Q share improvement in LA July 21, 2010 Q2 & H1 10 Results Review 15

16 2 Group purchasing Performance trend 2010 Direct materials Dec 08=100 FY 09 Average Q2 09 Average Net savings of 148mn or 2.2% in the quarter ( 310mn in H1), with positive contribution from newly established joint purchasing activities with Chrysler Group Substantially flat performance expected in H2 due to headwinds from certain raw material prices FY 10 Average Q2 10 Average Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 July 21, 2010 Q2 & H1 10 Results Review 16

17 3 Cost structure & manufacturing capacity Q2 update Enlarged workforce by ~1,900 or 1% vs. March-end New hirings mainly to support increased demand in LA Addition of ~450 employees due to full consolidation of Fiat-GM Powertrain Polska JV following acquisition of GM share As per agreements signed in 2010 with Unions, completed 400+ reductions in Italy (out of a targeted 1,200) for employees nearing retirement age; ~2/3 by year-end with full completion by 2011 Continued balancing production systems with market demand Italy: continued production stoppages through temporary lay-offs, although reduced by 20+% vs. Q2 last year, due to higher production levels mainly in capital goods Rest of Europe: production stoppages decreased on average by ~50% vs. Q2 last year, with Spain still lagging Effective management of increased demand in Poland & Brazil through utilization of overtime Fabbrica Italia project Agreement reached with Unions relating to production of Future Panda at G. Vico plant by 2011, ensuring greater operating flexibility Intense training program in compliance with WCM principles during industrialization phase Capacity utilization up to a max of 18 shifts per week (3 shifts per day) with overtime availability Smooth execution of agreement and ensured governance of plant at G. Vico as key to full implementation of Fabbrica Italia project World Class Manufacturing program YTD progress fully in line with ~6% FY target savings of transformation cost Achievements to date: 131 plants involved, of which 8 at Silver level (2 FPT plants awarded in Q2) & 18 at Bronze Continued strict discipline on SG&A, with spending increase in the quarter mainly due to higher advertising associated with new product launches July 21, 2010 Q2 & H1 10 Results Review 17

18 4 Outlook As expected, 2010 is materializing as a year of transition and stabilization The Group expects all of its Sectors to significantly improve performance over the prior year in the second semester, with the exception of the Automobiles business Performance of Automobiles business to be impacted by the reduction and/or elimination of eco-incentives programs which underpin demand for A and B segment cars in Western Europe Continued application of rigorous cost containment discipline Capex programs expected to increase over abnormally low levels of 2009, with gradual resumption of a normalized level of capital commitments across all Sectors Pending closing and reporting of Q3 financials, Group confirms following targets for the year Revenues in excess of 50bn Trading profit of 1.1 to 1.2bn Net profit near break even Net industrial debt above 5bn Highly probable, in view of Group s performance to date and forecast of trading activity for the businesses in remainder of the year, that Fiat will upgrade guidance for 2010 when announcing Q results July 21, 2010 Q2 & H1 10 Results Review 18

19 5 Worldwide sales Q2 Sales on track to FY target Units (000s) Q2 Q1 International Mexico Canada 407 Q2 +/- Q % International +9% Mexico -11% Canada +33% U.S. sales continue their increase Qtr over Qtr with market share up 30 basis points from Q at 9.4% for Q U.S. U.S. +24% Canadian market share remains strong at 12.9% of Industry in Q FY target confirmed 19

20 6 Update on demerger Transaction overview Partial and proportional Fiat Shareholders demerger of industrial Fiat Industrial Spa Fiat SpA 3 classes of shares activities from Fiat SpA under Italian Law ex Art Cod. Civ. ( Scissione Fiat Industrial Finance CNH Iveco FPT Automobiles Components Other Assets parziale proporzionale ) Demerged company to be called Fiat Industrial (FI) and I&M P&CV to own CNH, Iveco and FPT Industrial & Marine activities FI to be created with classes of shares exactly mirroring Fiat Shareholders Fiat s current structure 3 classes of shares Fiat Industrial SpA Fiat SpA 3 classes of shares All 3 classes of shares of FI to be listed in Milan simultaneously with demerger completion Fiat Industrial Finance CNH Iveco FPT I&M Automobies FPT P&CV Components Other Assets Every Fiat shareholder to own 1 share of Fiat and 1 of FI after demerger and listing July 21, 2010 Q2 & H1 10 Results Review 20

21 6 Update on demerger Privileges of each class of shares of Fiat in the dividend distribution to be modified, as follows Earnings distribution Current Fiat SpA By-laws Fiat S.p.A. by-laws as of Demerger (nominal value 3.50) Fiat Industrial S.p.A. by-laws as of Demerger (nominal value 1.50) Total Saving shares 0.31 (6.2%) (6.2%) (6.2%) 0.31 Preference shares 0.31 (6.2%) (6.2%) (6.2%) 0.31 Ordinary shares (3.1%) (3.1%) (3.1%) Ordinary shares and saving shares further distribution (3.1%) (3.1%) (3.1%) Saving and Preference shareholders will not be deprived of any right and therefore no special shareholders meeting is required to approve the transaction New provisions on dividends will not apply to distributions related to 2010 financial year July 21, 2010 Q2 & H1 10 Results Review 21

22 6 Update on demerger Preparatory activities on track as planned, including Allocation of debt to target ~50-50 split of net industrial debt at demerger date Set up of a Fiat Industrial funding platform / treasury vehicles ( Fiat Industrial Finance ) Highly confident letter jointly signed by 8 leading international banks (Barclays Capital, BNP Paribas, Citi, Crédit Agricole, IntesaSanPaolo, Société Générale, RBS, Unicredit) for new facilities of up to 4bn to allow Fiat Industrial to repay intercompany financing from Fiat after demerger date High level of liquidity targeted both at Fiat and Fiat Industrial consistent with individual, independent strong credit profile No early-repayment clause of outstanding bonds and main credit facilities triggered Fiat Board of Directors have approved the partial and proportional demerger and have authorized calling of EGM on Sep 16, 2010 for approval of demerger transaction Completion of the Demerger subject to shareholders approval and other regulatory approvals (Consob and Italian Stock Exchange) Expected completion confirmed by 2010 year-end Fiat and Fiat Industrial to be separately listed on the Milan Stock Exchange (expected January 1, 2011) July 21, 2010 Q2 & H1 10 Results Review 22

23 6 Update on demerger Pro-Forma Q2 & H Results Fiat & Fiat Industrial FIAT post demerger FIAT INDUSTRIAL mn Q2 '10 H1 '10 Q2 '10 H1 '10 Revenues 9,381 17,984 5,677 10,152 Trading Profit EBITDA Ind 842 1, CAPEX 650 1, July 21, 2010 Q2 & H1 10 Results Review 23

24 Appendix July 21, 2010 Q2 & H1 10 Results Review 24

25 Fiat Group Automobiles Improved sales mix contributing to 2.5% margin Revenues ( mn) 6,905 7,350 Unit Sales (x000) Q2 09 Q2 10 Trading Profit ( mn) Q2 09 Q2 10 Revenues up 6.4% (flat on constant currency) on better product mix Passenger cars down ~12% to 455k, with first-time inclusion of ~2k units of Chrysler Group sales for distribution in EU LCVs up ~30% to 99k Significant sales increases in most European markets partially offsetting weaker sales in Germany & Italy France up 10.5% to 35k, Spain nearly 3x 09 level to 14k Italy down 21.5% to 174k; Germany down 42% to 31k RoE up ~17% to 58k Brazil sales stable at 190k Company and dealer inventories at quarter-end in line with market forecast July 21, 2010 Q2 & H1 10 Results Review 25

26 Fiat Group Automobiles Trading profit variance & margin ( mn) (20) 13 (44) Overall volumes down 6.2% due to reduction in Passenger Cars notwithstanding significant increase in LCV volumes (+30%) Improved mix driven by LCVs; selective promotions with continued careful price management 2.2% (40) 2.5% Purchasing savings proceeding apace with initial benefits from joint purchasing activities with Chrysler Group Q2 '09 Volume Price Mix Purchasing Net Production Cost Absorp. R&D SG&A Other Q2 10 WCM program efficiencies more than offset by production cost increase driven by delta volumes impact SG&A on track with FY target with higher advertising spending in the quarter due to new product launches Other related to FX effect July 21, 2010 Q2 & H1 10 Results Review 26

27 Luxury & performance brands [ mn] Revenues Trading Profit Revenues Trading Profit Q2 09 Q2 10 Q2 09 Q2 10 Q2 09 Q2 10 Q2 09 Q2 10 Revenues up 8.7% over last year due to increased sales and positive contribution of new F458 Italia and F599 GTO 1,615 units sold, up 2.6% Trading profit up 7mn (15.7% margin) on higher revenues and efficiencies program Revenues up 63mn or 56.8% 1,697 units sold, up 45.2% driven by improved sales of Quattroporte and new GranCabrio Trading profit at 8mn (4x last year level) or 4.6% margin YTD trading profit of 128mn well on track to FY 10 targets ( 210mn or 10% margin combined) July 21, 2010 Q2 & H1 10 Results Review 27

28 Agricultural and Construction Equipment Strong demand recovery in several key markets Revenues ( mn) Revenues increased by 16% (up 9.4% in US$ terms): positive performance in NA, LA & RoW more than offset difficult conditions in WE 2,860 3,317 CNH global presence allowed company to grow revenues in face of difficult environment in certain markets NA up 11% WE down 13% LA up 85% Q2 09 Q2 10 RoW up 10% Agriculture NA and LA drove 11.3% increase in Revenues Trading Profit ( mn) Tractors and Combines unit deliveries up 6% Construction Equipment revenues rose 50.7% Revenues up across all regions Wholesale deliveries up in every region particularly in LA and RoW with exception of WE Light equipment Light equipment unit deliveries up 43% Heavy equipment unit deliveries up 58% Q2 09 Q2 10 Trading margin at 7.9% CE operations in positive territory for the first time since Q July 21, 2010 Q2 & H1 10 Results Review 28

29 Agricultural and Construction Equipment Trading profit variance & margin ( mn) Both AG and CE improved trading profit CE delivered positive profit 42 (39) (1) Improve industrial economics % Higher CE capacity utilization and absorption Increased use of localized plants in LA, India and Turkey 4.3% R&D stable Q2 '09 Volume/Mix Pricing, Net Production Cost SG&A R&D Other Q2 10 July 21, 2010 Q2 & H1 10 Results Review 29

30 Trucks and Commercial Vehicles Higher sales in Western Europe and strong Latin America markets Revenues ( mn) Revenues up 18% to 2.1bn Overall volumes up 32% to 34k units 2,097 By geography 1,773 WE up 28% to 22k units increasing in Italy +15%, Germany +35%, France +32%, Spain +78% and UK +70% EE up 27% Q2 09 Q2 10 LA up 49% By segment Trading Profit ( mn) Light up 33% Medium up 56% Heavy up 53% Inventories at competitive levels vis-à-vis sales development in H2 Q2 09 Q2 10 Profitability driven by sales volumes recovery with trading margin at 2.4% July 21, 2010 Q2 & H1 10 Results Review 30

31 Trucks and Commercial Vehicles Trading profit variance & margin ( mn) (4) Significant volume increase mainly driven (13) (15) (11) 50 by WE & LA Trucks and Commercial Vehicles recovery Purchasing savings & % improved WCM manufacturing 1.0% efficiency partially Q2 '09 Volume /Mix Price Purchasing Production Cost Cost R&D SG&A FX Other Q2 10 offset by cost inflation July 21, 2010 Q2 & H1 10 Results Review 31

32 Trucks and Commercial Vehicles Market shares by region WE market share Q % % 8.8% Change vs. Q p.p. Flat -0.1 p.p. EE market share Q % % % 2 Change vs. Q2 09 Flat -0.3 p.p p.p. Brazil market share Q2 10 Light (3.5-6T) Medium Heavy Light ( T) Medium (8.0-31T) 16.7% 3 3.4% % 3 Change vs. Q p.p p.p p.p T at 7.7% (-0.1 p.p.) vs. last year 2 Estimates 3 Brazil: Light 3.5-6T at 23.5% (-2.3p.p.); Medium T at 4.0% (+0.1 p.p.); Heavy 16T at 11% (+0.4p.p.) Heavy (>31T) WE market share 3.5T at 13.4% (8.8% 2.8T), up 0.2 p.p. vs. Q2 09 Share gain in Light driven by good performance in Germany & Spain Holding position in very competitive Medium & Heavy markets Brazil Overall share 3.5T at 8.2%, in line with last year Light segment: increased competition from Asian players due to favorable FX rates Launch of new versions of Stralis (Rating & Cursor engine application) supportive to share gain in Heavy July 21, 2010 Q2 & H1 10 Results Review 32

33 Components FPT Powertrain Technologies Revenues ( mn) 1,855 Other & Elim. (11)mn Sector revenues up 48% (+29.8% on comparable basis) Other & Elim. 2mn 1,253 1,220 Finalized share transfer agreement to acquire GM s 50% stake in Fiat-GM Powertrain Polska, now fully consolidated P&CV 891 Sales to third parties and JVs accounted for 20% (15% last year) Passenger & Commercial Vehicles I&M Revenues up 36.9% (+11.3% on comparable basis) on better mix: ~622k engines and ~598k transmissions (2.1)% (26) Q2 '09 Trading Result variance ( mn) & margin 58 Volume /Mix (7) Price Q2 '09 Q Purchasing Net 9 Production Cost 3 (11) % SG&A R&D Other Q2 10 Fire engine volumes down in Europe due to expiry of incentives in most countries, offsetting continued good performance in LA Diesel engine volumes up in Europe Industrial & Marine Revenues up 79.7% Engine sales at 112k (+79.6%) Gear boxes at 20k units (+66.0%) & axels at 37k units (+60.1%) Trading performance swing of 79mn chiefly on improved Industrial & Marine business and cost efficiencies July 21, 2010 Q2 & H1 10 Results Review 33

34 Components Teksid, Marelli, Comau Revenues ( mn) Teksid Revenues up ~43% Cast Iron sales up ~32% driven by Mercosur, NAFTA & Europe Aluminum sales up ~14% Trading profit of 6mn (loss of 4mn last year) 1,152 1,400 Q2 '09 Q2 10 Trading Result ( mn) 1 (12) (40) (4) Q2 '09 Q2 10 Magneti Marelli Revenues up 21.5% with all businesses continuing Y-o-Y improvement already seen earlier in the year Sharply recovered volumes in Germany and Czech Republic for Lighting and positive trend in Brazil, China and NAFTA Continued benefits from growth in demand for LCVs Trading profit of 26mn (break-even last year) due to higher sales volumes, cost containment measures and production performance Comau Revenues up 51.5% mainly driven by Body Welding operations in NA Order intake of 300mn more than doubling vs. last year level mainly driven by powertrain activities in NA Swing of 13mn in trading performance largely due to improved volumes for Body Welding July 21, 2010 Q2 & H1 10 Results Review 34