After the good news this morning on debt cancellation by June, Sergio Marchionne meets the analysts. Joining him on stage were Mike Manley, the Jeep driver, and Richard Palmer, the chief financial officer. No news on succession. The identity of the dolphin will be revealed in April 2019 in Amsterdam, on the occasion of the last assembly in which the current CEO will be present as executive manager of the group. But the heir, as Marchionne anticipated, "is present among the top managers invited to Balocco".
FCA: THE SIX NEWS IN THE NEW PLAN
Six of the most important news that emerged from the meeting:
- Fiat Chrysler will return to the dividend announces the manager. In the period of the 2018-2022 plan, FCA wants to "return to consistent shareholder remuneration". This will be done through "a dividend with a payout ratio of around 20%" and with a treasury share buyback plan. The return on capital target is “greater than 20%” at the top of the industry.
- “We expect that for 2022 we will maintain and increase European and Italian industrial capacity, thanks also to efforts in the electric sector.“We will invest 9 billion dollars for electrification of new products”, explained Marchionne, or 20 percent of the 45 billion provided for by the 2018 to 2022 plan, of which 75% destined for global brands. The group expects to achieve average annual revenue growth of 7%.
- Revenues from Jeep, Alfa, Maserati, Ram and Fiat Professional to rise from 65% to 80% of the total. Chrysler will remain in North America with no growth expectations outside the area.
- And Fiat? It is a European “regional” brand closely linked to compliance with increasingly stringent regulations imposed by regulators. But, thanks to the electric, he assures, the Italian plants will be saved (indeed upgraded): for the 500 a future of an electric city car is looming "because it is the ideal vehicle, for a fully electric solution". A new model will also be launched, the Giardiniera, “a small car with an unmistakable design and best-in-class interior spaces”. But the future of Alfa and Maserati also passes through electricity which, enriched by engines produced by Ferrari, is preparing to do battle with Tesla. And Jeep, the spearhead, will produce only somewhat electrified cars from 2022 even if the transition will involve a reduction in margins: "a price we are ready to pay" assures from the stage Mike Manley, head of Jeep, one of the possible successors of Marchionne. "Thanks to cost efficiencies - explains the head of finance Richard Palmer, another possible heir to the number one seat - we will absorb 60% of the higher expenditures for electricity".
- Mea culpa on Alfa Romeo. “We underestimated the difficulties of launching such a complex brand. But, above all, we have not taken into account the reaction of the German competitors”. Would you do it again? “In a different way yes, I would face the adventure again”. Today we start again with more modest objectives (400 models in 2022, the same figure already present in the 2014 plan, margin at 10% at the end of the plan). Margins will also remain more modest than Jeep and Ram until 2022.
- Marelli? The spin-off will close at the latest in early 2019 at the latest.”But if a significantly higher offer arrives, we would be ready to review our strategy”.
MARCHIONNE'S ANSWERS
The CEO of Fiat Chrysler then presented himself at the press conference, answering questions from journalists.
Mister Marchionne, are you delaying the announcement of the succession because you could sell? “Ask John, as a shareholder I can say that, if you intend to stay in the automotive sector, this is the best company there is in the world. The situation of the group has never been so good. We have to go back to the sixties, in a completely different situation”.
And John Elkann adds: “We had more than one opportunity to sell, we didn't. On the contrary, we have consolidated our presence”. “I think it is interesting to see that the sale of FCA is a topic that continues to arouse interest.” 'We have been in this company for over a hundred years. We have been open to consolidation, this has happened over time and we have come to have FCA, Fiat and Chrysler together, and there are benefits to consolidation. But this does not mean that we sell.'
But could Marchionne stay?
"We have an agreement with Dr. Marchionne and with the board."
on US standards, the CEO explained: “I've been to the White House twice. The first time we asked for a standard review already promised by Obama, then we backed down. After all, we promised Obama the 500, then the market changed and we asked Trump to change”.
What things are you looking for in Marchionne's successor?
"I'm referring to what Sergio said about the change in the company". Marchionne: Yes, it takes the courage to change”.
Economic nationalism?
“It is a material risk that we run. If there isn't a balance between revenue and sales, then that's a problem. If so, it will slow us down in terms of our ability to react."
(Last update: 18.40 pm on 1st June)
