FCA: 2016 Full Year and Fourth Quarter Results

FCA delivers record 2016 results. Adjusted EBIT of €6.1 billion, up 26% with 5.5% margin, up 120 bps. Adjusted Net Profit of €2.5 billion, up 47% and Net Profit of €1.8 billion. Net Industrial Debt reduced to €4.6 billion. Guidance for 2017 confirms conviction in achievement of 2018 targets.

• Worldwide combined shipments(1) of 4,720 thousand units, consistent with prior year; Jeep combined shipments(1) up 9% to 1,424 thousand units

• Net revenues of €111 billion, in line with 2015

• Adjusted EBIT(2) increased 26% to €6,056 million, with all segments profitable and improving year‐over‐year

• Adjusted net profit(2) increased 47% to €2,516 million; Net profit(3) of €1,814 million, significant increase from €93 million in 2015

• Net industrial debt(2) at €4.6 billion, €0.5 billion improvement from prior year‐end

• Market share in Europe up 40 bps to 6.5%; remained market leader in Brazil with 18.4% share and maintained share in U.S.(4) at 12.6%

  FIAT CHRYSLER AUTOMOBILES ‐ Financial Results

  Three months ended December 31			Years ended December 31
  2016 2015 Change			(€ million, except as otherwise noted)	2016 2015(3) Change
  1,233	1,257	(24)	(2)% Combined shipments(1) ('000 units)	4,720	4,738	(18)	- %
  1,155	1,206	(51)	(4)% Consolidated shipments(1) ('000 units)	4,482	4,602	(120)	(3)%
  29,719	29,414	305	+1 % Net revenues	111,018	110,595	423	- %
  1,549	1,530	19	+1 % Adjusted EBIT(2)	6,056	4,794	1,262	+26 %
  409	196	213	+109 % Net profit	1,814	93	1,721	n.m.(5)
  539	1,041	(502)	(48)% Adjusted net profit(2)	2,516	1,708	808	+47 %
  0.268	0.129	0.139	+108 % Diluted earnings per share (EPS)(€)	1.181	0.055	1.126	n.m.(5)
  0.353	0.686	(0.333)	(49)% Adjusted diluted EPS(2) (€)	1.641	1.122	0.519	+46 %
  4,585	6,514(6)	(1,929)	Net industrial debt(2)	4,585	5,049	(464)
  24,048	25,292(6)	(1,244)	Debt	24,048	27,786	(3,738)
  23,802	23,197(6)	605	Available liquidity	23,802	24,557	(755)

  ADJUSTED EBIT ADJUSTED NET PROFIT

  • Record full‐year driven by continued strong performance in NAFTA and improvements in all other segments, in particular EMEA and Maserati

  • NAFTA margin increased to 7.4% from 6.4%

  • Maserati margin more than doubled to 9.7%, with second‐half margin of 12.0%

  • Increase primarily driven by strong operating performance

  • Net financial expenses down €350 million to €2.0 billion primarily as a result of gross debt reduction

  • Tax expense increased to €1.5 billion from €0.7 billion primarily due to higher profits in NAFTA

    NET INDUSTRIAL DEBT 2017 GUIDANCE(7)

  • Improvement in Net industrial debt primarily due to operating cash flow from industrial activities, net of capital expenditures of €8.8 billion, reached €1.8 billion for the year

  • Negative FX impact of €1.1 billion primarily due to strengthening of Brazilian Real

  • Strong available liquidity at year‐end of €23.8 billion

  • Net revenues €115 ‐ €120 billion

  • Adjusted EBIT > €7.0 billion

  • Adjusted net profit > €3.0 billion

  • Net industrial debt

    (1) Combined shipments include shipments by the Group's consolidated subsidiaries and unconsolidated joint ventures, whereas consolidated shipments only include shipments from the Group's consolidated subsidiaries; (2) Refer to page 7 for reconciliations of Net profit from continuing operations to Adjusted EBIT and Net profit from continuing operations to Adjusted net profit; also refer to page 8 for a reconciliation of Diluted EPS (continuing operations) to Adjusted diluted EPS and Debt to Net industrial debt; (3) The Group's results refer to the Group's continuing operations, which exclude Ferrari, consistent with Ferrari's classification as a discontinued operation for the year ended December 31, 2015; (4) Sales data represents sales to retail and fleet customers and limited deliveries to Group‐related persons. Sales by dealers to customers are reported through a new‐vehicle delivery system; (5) Number not meaningful; (6) At September 30, 2016; (7) 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 supplemental financial measures in accordance with our policy are, by definition, not predictable and uncertain.

    Results by segment

    Net revenues and Adjusted EBIT by segment

    Net revenues Adjusted EBIT

    Years ended December 31 Years ended December 31

    2016 2015 (€ million) 2016 2015

    69,094	69,992 NAFTA	5,133	4,450
    6,197	6,431 LATAM	5	(87)
    3,662	4,885 APAC	105	52
    21,860	20,350 EMEA	540	213
    3,479	2,411 Maserati	339	105
    9,659	9,770 Components	445	395
    (2,933)	(3,244) Other activities, unallocated items and eliminations	(511)	(334)
    111,018	110,595 Total	6,056	4,794

    NAFTA Years ended December 31 Change

    Shipments (thousands of units)	2,587	2,726
    Net revenues (€ million)	69,094	69,992 (1)% (1) %
    Adjusted EBIT (€ million)	5,133	4,450 +15 % +15 %
    Adjusted EBIT margin	7.4%	6.4% +100 bps

    2016 2015 Actual CER

    (5)%

    Adjusted EBIT margin up 100 bps to 7.4%

  • Decrease in shipments primarily due to planned phase‐out of the Chrysler 200 and Dodge Dart

  • Net revenues decrease due to lower shipments, partially offset by favorable vehicle mix

  • Adjusted EBIT increase primarily due to improved vehicle mix, purchasing savings and lower warranty costs, partially offset by lower shipments, increase in product costs for content enhancements and higher manufacturing costs

  • Adjusted EBIT excludes total net charges of €667 million, primarily relating to:

    • €414 million charge mainly due to an expansion of the scope of the Takata airbag inflator recalls announced in May 2016

    • €156 million in first half of year for incremental costs related to the implementation of the Group's plan to realign existing capacity to better meet market demand for pickup trucks and SUVs

    • €132 million estimated net costs associated with a recall for which costs are being contested with a supplier; although FCA believes the supplier has responsibility for the recall, only a partial recovery of the estimated costs has been

      recognized pursuant to a cost sharing agreement

    • €29 million gain related to pension settlements in December 2016

      LATAM Years ended December 31 Change

      2016 2015 Actual CER

      Shipments (thousands of units)	456	553
      Net revenues (€ million)	6,197	6,431 (4)% +1 %
      Adjusted EBIT (€ million)	5	(87) n.m.(5) n.m.(5)
      Adjusted EBIT margin	0.1%	(1.4)% n.m.(5)

      (18)%

      Positive Adjusted EBIT despite continuing poor market conditions

  • Decrease in shipments reflects poor market conditions in Brazil due to continued macroeconomic weakness, partly offset by improvement in Argentina

  • Decrease in Net revenues with lower shipments, partially offset by favorable vehicle mix mainly from all‐new Fiat Toro and all‐new Jeep Compass

  • Adjusted EBIT increase primarily as a result of favorable vehicle mix and a decrease in selling, general and administrative costs driven by continued cost reduction initiatives to right‐size to market volume, which were partially offset by lower shipments and higher product costs driven by inflation and new products

  • Adjusted EBIT excludes total charges of €142 million primarily relating to restructuring costs to adjust the workforce requirements to current market conditions of €68 million, asset impairments of €52 million and €19 million related to the re‐measurement of net monetary assets in Venezuela after adoption of the new floating exchange rate

    APAC Years ended December 31 Change

    2016 2015 Actual CER

    Shipments (thousands of units)	91	149
    Net revenues (€ million)	3,662	4,885 (25)% (24) %
    Adjusted EBIT (€ million)	105	52 +102 % +114 %
    Adjusted EBIT margin	2.9%	1.1% +180 bps

    (39)%

    Joint venture fully operational with production of three Jeep SUVs

  • Decrease in shipments due to transition to local Jeep production in China through China JV; combined shipments (which include JV produced units) up 23% to 233 thousand units

  • Net revenues decrease primarily as a result of lower imported volumes in China due to transition to local Jeep production, partially offset by favorable vehicle mix from imported vehicles and increased sales of components

  • Adjusted EBIT increase mainly due to favorable mix on imported vehicles, lower marketing expenses (now incurred by China JV) and improved results from China JV, partially offset by lower net price due to incentives for completion of the sell‐out of discontinued and other imported vehicles and higher industrial costs due to negative FX transaction effects

  • Adjusted EBIT excludes total net charges of €44 million, primarily relating to asset impairments of

    €109 million mainly for the locally produced Fiat Ottimo and Viaggio (in connection with capacity realignment to SUV production in China) and a net gain of €55 million reflecting costs and initial insurance recoveries related to the Q3 2015 Tianjin (China) port explosions

    EMEA Years ended December 31 Change

    2016 2015 Actual CER

    Shipments (thousands of units)	1,306	1,142
    Net revenues (€ million)	21,860	20,350 +7 % +9 %
    Adjusted EBIT (€ million)	540	213 +154 % +157 %
    Adjusted EBIT margin	2.5%	1.0% +150 bps

    +14 %

    Significant

  • European market share (EU28+EFTA) for passenger cars up 40 bps to 6.5% (up 60 bps to 28.9% in

    (8)

    profitability

    Italy) and for light commercial vehicles (LCVs)

    up 30 bps to 11.6% (down 190 bps to 43.8% in Italy)

    improvement together with market share growth

  • Passenger car shipments up 13% to 1,018 thousand units and shipments of LCVs up 19% to 288

    thousand units

  • Net revenues increase primarily due to higher volumes and favorable vehicle mix mainly driven by all‐ new Fiat Tipo family, all‐new Alfa Romeo Giulia and Jeep Renegade

  • Adjusted EBIT increase mainly driven by higher Net revenues, purchasing and manufacturing efficiencies, improved results from joint ventures, partially offset by higher advertising to support new product launches and higher research and development costs

    MASERATI Years ended December 31 Change

    Shipments (units)	42,100	32,474
    Net revenues (€ million)	3,479	2,411 +44 % +47 %
    Adjusted EBIT (€ million)	339	105 +223 % +229 %
    Adjusted EBIT margin	9.7%	4.4% +530 bps

    2016 2015 Actual CER

    +30 %

    Adjusted EBIT margin more than doubled to 9.7%, with second‐half margin of 12.0%

  • Increase in shipments primarily driven by launch of all‐new Maserati Levante with significant increases in all regions: China (+91%), Europe (+37%) and North America (+14%)

  • Net revenues increase primarily due to higher shipments and favorable vehicle and market mix

  • Adjusted EBIT improvement resulting from increase in Net revenues, partially offset by increase in industrial costs and commercial launch activities

(8) Due to unavailability of market data for LCVs in Italy, the figures reported are an extrapolation and discrepancies with actual data could exist