FCAU - Fiat Chrysler Automobiles

[fareastwarriors]

Automakers Revisit Tactics That Hurt Them Before Recession

 

 

http://www.nytimes.com/2016/04/15/automobiles/wheels/automakers-revisit-tactics-that-hurt-them-before-recession.html?ref=international

[fareastwarriors]

Marchionne's Merger Fixation

 

 

http://www.bloomberg.com/gadfly/articles/2016-04-18/marchionne-s-merger-fixation-makes-fiat-look-weak

[phil_Buffett]

q1: FCA posts record First Quarter Results with Adjusted EBIT nearly doubled to €1.4 billion, and all segments profitable. Adjusted Net Profit reached €0.5 billion. Full year guidance is confirmed.

 

http://www.fcagroup.com/en-US/media_center/fca_press_release/FiatDocuments/2016/april/FCA_BOARD_OF_DIRECTORS_MEETING_2016_FIRST_QUARTER_RESULTS.pdf

 

 

spinoff from rcs media in may 2016 (around 0,067 rcs Shares per fiat share)

 

http://www.fcagroup.com/en-US/media_center/fca_press_release/FiatDocuments/2016/april/FCA_announces_plans_for_completing_distribution_of_its_ownership_in_RCS.pdf

[bonkers]

To all avid FCA followers, what's your take on latest Q1? 

[merkhet]

To all avid FCA followers, what's your take on latest Q1?

 

Numbers looked good to me. Seems like they are executing.

[Philip Morris IV]

They also handedly beat the consensus estimate on the adj. EPS - $0.38 actual vs. $0.21 expected.  And yet the stock was down 2-3% today.

 

This market really hates autos that don't start with "T".

[TwoCitiesCapital]

They also handedly beat the consensus estimate on the adj. EPS - $0.38 actual vs. $0.21 expected.  And yet the stock was down 2-3% today.

 

This market really hates autos that don't start with "T".

 

Indeed. Only 5x expected earnings, post Ferrari spin-off, with so much improvement available in LatAm and Europe.

[racemize]

Also, a ton of improvement possible by 2018, which is not present for GM (though it trades at a similar multiple). 

 

Of course, there is all that debt.  And it went up this quarter, but they said it would reverse in the next, and that has been true in the past as well.  I think Fiat just has to get to net cash and show everyone what Jeep can do.  Until then, we are sitting at this multiple.  I hope I'm wrong.

[compounding]

Also, a ton of improvement possible by 2018, which is not present for GM (though it trades at a similar multiple). 

 

Of course, there is all that debt.  And it went up this quarter, but they said it would reverse in the next, and that has been true in the past as well.  I think Fiat just has to get to net cash and show everyone what Jeep can do.  Until then, we are sitting at this multiple.  I hope I'm wrong.

 

Net debt only up due to seasonality in working capital which should be reversed in Q2, gross debt was actually down.

 

Think it was a solid quarter otherwise, a little better in NAFTA than I expected, but nothing crazy good either. If I have to guess I think the stock was down due to the revenue miss which was mostly FX I believe.

 

Also, thought it was interesting that Sergio talked about a timeline for selling the components biz in the Q&A, talking about how they will "seriously think about its place in the portfolio" after they have completed their plan for margin expansion.

 

Another, more comical line from Sergio on the call was when he talked about FCA's balance sheet being the most inefficient use of cash he has ever seen in his life ... except ECB.

[sampr01]

FACU in Late stage talks with ALPHABET's GOOGLE car project 8)

[fareastwarriors]

FACU in Late stage talks with ALPHABET's GOOGLE car project 8)

 

 

http://www.wsj.com/articles/fiat-chrysler-alphabet-in-partnership-talks-1461861866

 

Fiat Chrysler, Alphabet in Partnership Talks

 

Alphabet has been seeking auto-industry partnerships, offering to sell self-driving car technology under development for several years

 

 

 

[TwoCitiesCapital]

FACU in Late stage talks with ALPHABET's GOOGLE car project 8)

 

 

http://www.wsj.com/articles/fiat-chrysler-alphabet-in-partnership-talks-1461861866

 

Fiat Chrysler, Alphabet in Partnership Talks

 

Alphabet has been seeking auto-industry partnerships, offering to sell self-driving car technology under development for several years

 

Yasssss! Fingers crossed.

[LC]

Either way it goes, it shows good things about marchione. He's not a ceo sitting idly by.

[merkhet]

Either way it goes, it shows good things about marchione. He's not a ceo sitting idly by.

 

Takes away the barb that Marchionne doesn't understand where things are going. He does. He just knows it's pointless for him to spend money that's better spent by Google.

[bonkers]

U.S. sales are out, FCA's growth continues, sales +6 % (Ford +4 %, GM +3 %).

 

http://www.fcagroup.com/en-US/media_center/fca_press_release/FiatDocuments/2016/may/APRIL_2016_FCA_US_LLC_SALES_IN_USA.pdf

http://corporate.ford.com/content/dam/corporate/en/investors/investor-events/Sales%20Calls/2016/april-2016-sales.pdf

http://www.gm.com/mol/m-2016-may-0503-gmsales.html

 

FCA is in fact projecting SAAR of 17.9 (FCA definition), which is again higher than last month. Although they might be biased by their own success (and competitors might be declining), to me it seems the U.S. car sales are holding up pretty well. GM estimated now SAAR of 17.6. In my view, so far this year indicates a SAAR of some 17+ (FRED definition). So this year might be well on par with 2015.

 

So far this year FCA has been growing in Europe by 15-20 % yoy, clearly ahead of the market.

 

In the mean time FCA profits keep increasing, and Q2 will hopefully see strongly positive cash flow reducing the net debt. I try to stay away from guessing these things, but as it looks like now FCA's Q2 can take many pundits by surprise.

[Guest neiljgsingh]

Fiat Chrysler, Google to partner on autonomous minivans

 

http://www.detroitnews.com/story/business/autos/chrysler/2016/05/03/fiat-chrysler-autonomous/83885970/

 

Can't think of a better car for them to partner up on. Financial terms not announced, but there's no doubt in my mind that they got a better deal than GM, which bought a startup at 10x private market valuation for $1bn, and will see better investor sentiment since the geniuses at Google are now on-board. Sergio never fails to impress.

[nikhil25]

Some more color on the partnership:

 

Fiat Chrysler CEO: Unclear who owns self-driving cars' data

http://www.reuters.com/article/us-fiatchrysler-marchionne-idUSKCN0XX1KF

 

Fiat Chrysler Automobiles and Alphabet Inc's Google have yet to determine who will own data collected in their collaboration on testing self-driving vehicles, FCA Chief Executive Sergio Marchionne said Friday.

 

"That's exactly what has to be determined," Marchionne said in response to a reporter's question on data ownership. "We need to get to a stage where the car is viable so we can discuss the spoils of that work. We're not there."

 

"The objective of this first phase of our collaboration is very targeted," Marchionne said at a news conference at FCA's Windsor plant. "It's designed to take Google technology into the minivan. It's very, very focused. It has a very clear objective and a very clear timeline. What develops from here, we'll see." "It's too early in this process to try and make the call about who is going to end up with sort of the winning solution," Marchionne said.

 

Marchionne said he has noticed "efforts by others to pre-empt what I consider to be a natural evolution of choices and so making unequivocal bets with companies who are in that space today, and effectively precluding the development with others is a very dangerous bet.

[fareastwarriors]

Some more color on the partnership:

 

Fiat Chrysler CEO: Unclear who owns self-driving cars' data

http://www.reuters.com/article/us-fiatchrysler-marchionne-idUSKCN0XX1KF

 

Fiat Chrysler Automobiles and Alphabet Inc's Google have yet to determine who will own data collected in their collaboration on testing self-driving vehicles, FCA Chief Executive Sergio Marchionne said Friday.

 

"That's exactly what has to be determined," Marchionne said in response to a reporter's question on data ownership. "We need to get to a stage where the car is viable so we can discuss the spoils of that work. We're not there."

 

"The objective of this first phase of our collaboration is very targeted," Marchionne said at a news conference at FCA's Windsor plant. "It's designed to take Google technology into the minivan. It's very, very focused. It has a very clear objective and a very clear timeline. What develops from here, we'll see." "It's too early in this process to try and make the call about who is going to end up with sort of the winning solution," Marchionne said.

 

Marchionne said he has noticed "efforts by others to pre-empt what I consider to be a natural evolution of choices and so making unequivocal bets with companies who are in that space today, and effectively precluding the development with others is a very dangerous bet.

 

 

 

 

http://www.nytimes.com/2016/05/07/business/fiat-chrysler-chief-sees-self-driving-technology-in-five-years.html?ref=international

 

Head of Fiat Chrysler Sees Self-Driving Cars in Five Years, Not 20

[merkhet]

http://www.autonews.com/article/20160511/OEM04/160519964/?X-IgnoreUserAgent=1

 

U.S. light-vehicle deliveries are forecast to rise in 2016, the seventh straight year -- they hit 17.47 million in 2015 -- and many analysts see volume remaining above 16 million a year through 2021.

 

Bank of America expects U.S. car and light-truck demand to peak in 2018 at around 20 million vehicles before declining to about 14 million in 2026, Murphy said at the APA luncheon.

 

Doesn't look like peak SAAR is "just around the corner"...

[Jurgis]

How good are these predictions in general though? (No, I don't have a prediction of my own :) )

[merkhet]

How good are these predictions in general though? (No, I don't have a prediction of my own :) )

 

Fair point. Not clear. Would like to see the underlying reports/analysis.

[bonkers]

Call me crazy or just an amateur, but I like FCAU more all the time.

 

It is by no means risk-free, and I have a long list of things that can still go wrong, but I am more optimistic about few factors that have become less probable of derailing the whole thing.

 

1. The all-important U.S. market does not look like it has peaked. In fact, I think it is still probable that it will grow further, or at least stay at a good level.

2. If this happens, I have more and more confidence that the management is doing the right things to boost profits.

3. In Europe (and export), the new products might still flop, but at least recent reviews of both Alfa Romeo Giulia and Maserati Levante are extremely promising. I don't try to guess consumer tastes, distribution can fail, etc. but there seems to be little wrong with these new products. On top of that, Renegade is a hit.

4. In China, market should have appeal for Renegade and Cherokee.

5. Debt and liquidity seems very much under control, and even if net debt might not decline so much in Q2 either (due to car mix etc.), it should start visibly coming down in Q4.

 

In fact, I think the biggest risk to the investment is that the market would not give any credit to FCA's (adj.) earnings...So that the stock goes from P/E 5 to 4 to 3 to 2...and other investors just wait for self-driving cars or the next recession. In such a case, to hell with value investing, I'll go back to work at McDonald's!

[whatdadil9]

I agree. How do you handicap P/E Going from 4,3,2,1?

 

I think the Company will do $6.00 of EPS in 2018. The prob is...they are not returning it to shareholders in the form of dividends and buybacks. they are reducing debt but the argument is that everyone else is already net cash.

 

Unfortunately, it seems as if in order to get paid you need industry sentiment to change with consolidation (maximizing ROIC, etc.) or show that major tech players arent going to reduce OEMS to zilch...

[merkhet]

I agree. How do you handicap P/E Going from 4,3,2,1?

 

I think the Company will do $6.00 of EPS in 2018. The prob is...they are not returning it to shareholders in the form of dividends and buybacks. they are reducing debt but the argument is that everyone else is already net cash.

 

Unfortunately, it seems as if in order to get paid you need industry sentiment to change with consolidation (maximizing ROIC, etc.) or show that major tech players arent going to reduce OEMS to zilch...

 

How you getting to a $6 EPS? Are you assuming a 10% EBIT margin?

[whatdadil9]

If you take the EU/USD exchange and apply it to the high end of their EBIT range (which I think is albeit too low) then apply an appropriate interest rate on their debt. They said they will require 15bn of liquidity and 5bn of net cash so thats roughly 10bn of debt at ~5pct rates is 500m eur finance cost with no credit for the cash.. Their EPS estimate doesnt tie to EBIT. I think they have built in alot of wiggleroom. Run the math.