6-K FCA NV Q1 2019 Earnings Shell


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 6-K
 

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2019
Commission File No. 001-36675
 
Fiat Chrysler Automobiles N.V.
(Translation of Registrant’s Name Into English)
 
25 St. James's Street
London SW1A 1HA
United Kingdom
Tel. No.: +44 (0) 20 7766 0311
(Address of Principal Executive Offices)
 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule101(b) (1): ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule101(b) (7): ¨

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing
the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ¨ No x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

 







The following exhibit shall be deemed to be incorporated by reference into the Registrant’s Registration Statement on Form F-3 (File No. 333-217806) and to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished:
Exhibit 99.1
Fiat Chrysler Automobiles N.V. Interim Report as of and for the three months ended March 31, 2019

The following exhibits are furnished herewith:
Exhibit 99.2
Fiat Chrysler Automobiles N.V. Supplemental information as of and for the three months ended March 31, 2019
Exhibit 99.3
Fiat Chrysler Automobiles N.V. Supplemental information as of and for the three months ended March 31, 2019









SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 3, 2019
FIAT CHRYSLER AUTOMOBILES N.V.
 
 
 
 
 
 
 
 
 
By:
/s/ Richard K. Palmer
 
 
Name: Richard K. Palmer
 
 
Title: Chief Financial Officer









Index of Exhibits

Exhibit Number
Description of Exhibit
99.1
Fiat Chrysler Automobiles N.V. Interim Report as of and for the three months ended March 31, 2019
99.2
Fiat Chrysler Automobiles N.V. Supplemental information as of and for the three months ended March 31, 2019
99.3
Fiat Chrysler Automobiles N.V. Supplemental information as of and for the three months ended March 31, 2019



Exhibit 99.1 FCA NV 2019.03.31 Interim Report
Exhibit 99.1
https://cdn.kscope.io/85a1aa48fbd9855d49e04f95b84b55ef-fcagrouplogo.jpg
Interim Report
As of and for the three months ended March 31, 2019




TABLE OF CONTENTS
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



CERTAIN DEFINED TERMS
In this Interim Report, unless otherwise specified, the terms “we”, “our”, “us”, the “Group”, the “Company” and “FCA” refer to Fiat Chrysler Automobiles N.V., together with its subsidiaries and its predecessor prior to the completion of the merger of Fiat S.p.A. with and into Fiat Investments N.V. on October 12, 2014 (at which time Fiat Investments N.V. was renamed Fiat Chrysler Automobiles N.V., or “FCA NV”), or any one or more of them, as the context may require. References in this Interim Report to “Fiat” refer solely to Fiat S.p.A., the predecessor of FCA NV prior to the Merger. References to “FCA US” refer to FCA US LLC, together with its direct and indirect subsidiaries.
All references in this Interim Report to “Euro” and “€” refer to the currency issued by the European Central Bank. The Group’s financial information is presented in Euro. All references to “U.S. Dollars”, “U.S. Dollar”, “U.S.$” and “$” refer to the currency of the United States of America (or “U.S.”).
Forward-Looking Statements
Statements contained in this Interim Report, particularly those regarding possible or assumed future performance, competitive strengths, costs, dividends, reserves and growth of FCA, industry growth and other trends and projections and estimated company earnings are “forward-looking statements” that contain risks and uncertainties. In some cases, words such as “may”, “will”, “expect”, “could”, “should”, “intend”, “estimate”, “anticipate”, “believe”, “remain”, “on track”, “design”, “target”, “objective”, “goal”, “forecast”, “projection”, “outlook”, “prospects”, “plan”, or similar terms are used to identify forward-looking statements. These forward-looking statements reflect the respective current views of the Group with respect to future events and involve significant risks and uncertainties that could cause actual results to differ materially.
These factors include, without limitation:
our ability to launch products successfully and to maintain vehicle shipment volumes;
changes in the global financial markets, general economic environment and changes in demand for automotive products, which is subject to cyclicality;
changes in local economic and political conditions, changes in trade policy and the imposition of global and regional tariffs or tariffs targeted to the automotive industry, the enactment of tax reforms or other changes in tax laws and regulations;
our ability to expand certain of our brands globally;
our ability to offer innovative, attractive products;
our ability to develop, manufacture and sell vehicles with advanced features, including enhanced electrification, connectivity and autonomous-driving characteristics;
various types of claims, lawsuits, governmental investigations and other contingencies affecting us, including product liability and warranty claims and environmental claims, investigations and lawsuits;
material operating expenditures in relation to compliance with environmental, health and safety regulations;
the intense level of competition in the automotive industry, which may increase due to consolidation;
exposure to shortfalls in the funding of our defined benefit pension plans;
our ability to provide or arrange for access to adequate financing for our dealers and retail customers and associated risks related to the establishment and operations of financial services companies, including capital required to be deployed to financial services;
our ability to access funding to execute our business plan and improve our business, financial condition and results of operations;

3



a significant malfunction, disruption or security breach compromising our information technology systems or the electronic control systems contained in our vehicles;
our ability to realize anticipated benefits from joint venture arrangements;
our ability to successfully implement and execute strategic initiatives and transactions, including our plans to separate certain businesses;
disruptions arising from political, social and economic instability;
risks associated with our relationships with employees, dealers and suppliers;
increases in costs, disruptions of supply or shortages of raw materials;
developments in labor and industrial relations and developments in applicable labor laws;
exchange rate fluctuations, interest rate changes, credit risk and other market risks;
political and civil unrest;
earthquakes or other disasters; and
other factors discussed elsewhere in this Interim Report.
Furthermore, in light of the inherent difficulty in forecasting future results, any estimates or forecasts of particular periods that are provided in this Interim Report are uncertain. We expressly disclaim and do not assume any liability in connection with any inaccuracies in any of the forward-looking statements in this Interim Report or in connection with any use by any third party of such forward-looking statements. Actual results could differ materially from those anticipated in such forward-looking statements. We do not undertake an obligation to update or revise publicly any forward-looking statements.
Additional factors which could cause actual results and developments to differ from those expressed or implied by the forward-looking statements are included in the section Risks and Uncertainties of this Interim Report.



    

4



MANAGEMENT DISCUSSION AND ANALYSIS
Highlights - from continuing operations
Our Magneti Marelli business has been classified as a discontinued operation for the three months ended March 31, 2019 and 2018. Refer to Note 2, Scope of consolidation in our Interim Condensed Consolidated Financial Statements elsewhere in this Interim Report for additional information. Unless otherwise stated, all figures below exclude results from discontinued operations:
 
 
Three months ended March 31
(€ million, except shipments, which are in thousands of units, and per share amounts)
 
2019
 
2018
Combined shipments(1)
 
1,037

 
1,204

Consolidated shipments(2)
 
1,000

 
1,151

 
 
 
 
 
Net revenues
 
24,481

 
25,733

Adjusted EBIT(3)
 
1,067

 
1,501

Net profit from continuing operations
 
508

 
951

Adjusted net profit(4)
 
570

 
963

Profit from discontinued operations, net of tax
 
111

 
70

Net profit (including discontinued operations)
 
619

 
1,021

 
 
 
 
 
Earnings per share - including discontinued operations(5)
 
 
 
 
Basic earnings per share (€)
 
0.40

 
0.66

Diluted earnings per share (€)
 
0.39

 
0.65

 
 
 
 
 
Earnings per share from continuing operations(5)
 
 
 
 
Basic earnings per share (€)
 
0.33

 
0.62

Diluted earnings per share (€)
 
0.32

 
0.61

 
 
 
 
 
Adjusted diluted earnings per share(6)
 
0.36

 
0.62

 
 
 
 
 
Cash flows from operating activities
 
699

 
2,348

Of which: Cash flows from continuing operations
 
1,070

 
2,213

Of which: Cash (used by)/flows from discontinued operations(7)
 
(371
)
 
135

Industrial free cash flows(8)
 
(270
)
 
1,010

________________________________________________________________________________________________________________________________________________
(1) Combined shipments include shipments by the Group's consolidated subsidiaries and unconsolidated joint ventures.
(2) Consolidated shipments only include shipments by the Group's consolidated subsidiaries.
(3) Refer to sections — Non-GAAP Financial Measures, Group Results and Results by Segment in this Interim Report for further discussion.
(4) Refer to sections — Non-GAAP Financial Measures and Group Results in this Interim Report for further discussion.
(5) Refer to Note 18, Earnings per share, in the Interim Condensed Consolidated Financial Statements included in this Interim Report.
(6) Refer to sections - Non-GAAP Financial Measures and Group Results in this Interim Report for further discussion.
(7) Includes only cash flows relating to third parties and excluding intercompany of €65 million and €67 million for the three months ended March 31, 2019 and 2018 respectively.
(8) Amounts exclude discontinued operations. Refer to section — Non-GAAP Financial Measures and Liquidity and Capital Resources in this Interim Report for further discussion.

5



Non-GAAP Financial Measures
We monitor our operations through the use of several non-generally accepted accounting principles (“non-GAAP”) financial measures: Adjusted Earnings Before Interest and Taxes (“Adjusted EBIT”), Adjusted net profit, Adjusted diluted earnings per share (“Adjusted diluted EPS”), Industrial free cash flows and certain information provided on a constant exchange rate (“CER”) basis. We believe that these non-GAAP financial measures provide useful and relevant information regarding our operating results and enhance the overall ability to assess our financial performance. They provide us with comparable measures which facilitate management’s ability to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions. These and similar measures are widely used in the industry in which we operate, however, these financial measures may not be comparable to other similarly titled measures of other companies and are not intended to be substitutes for measures of financial performance as prepared in accordance with IFRS as issued by the IASB as well as IFRS adopted by the European Union.
Adjusted EBIT: excludes certain adjustments from Net profit from continuing operations, including: gains/(losses) on the disposal of investments, restructuring, impairments, asset write-offs and unusual income/(expenses) that are considered rare or discrete events that are infrequent in nature, and also excludes Net financial expenses and Tax expense/(benefit).
Adjusted EBIT is used for internal reporting to assess performance and as part of the Group's forecasting, budgeting and decision making processes as it provides additional transparency to the Group's core operations. We believe this non-GAAP measure is useful because it excludes items that we do not believe are indicative of the Group’s ongoing operating performance and allows management to view operating trends, perform analytical comparisons and benchmark performance between periods and among our segments. We also believe that Adjusted EBIT is useful for analysts and investors to understand how management assesses the Group’s ongoing operating performance on a consistent basis. In addition, Adjusted EBIT is one of the metrics used in the determination of the annual performance bonus for the Chief Executive Officer of the Group and other eligible employees, including members of the Group Executive Council.
Refer to the sections Group Results and Results by Segment below for further discussion and for a reconciliation of this non-GAAP measure to Net profit from continuing operations, which is the most directly comparable measure included in our Interim Condensed Consolidated Income Statement. Adjusted EBIT should not be considered as a substitute for Net profit from continuing operations, cash flow or other methods of analyzing our results as reported under IFRS.
Adjusted net profit: is calculated as Net profit from continuing operations excluding post-tax impacts of the same items excluded from Adjusted EBIT, as well as financial income/(expenses) and tax income/(expenses) considered rare or discrete events that are infrequent in nature.
We believe this non-GAAP measure is useful because it also excludes items that we do not believe are indicative of the Group’s ongoing operating performance and provides investors with a more meaningful comparison of the Group's ongoing operating performance. In addition, Adjusted net profit is one of the metrics used in the determination of the annual performance bonus and the achievement of certain performance objectives established under the terms of the equity incentive plan for the Chief Executive Officer of the Group and other eligible employees, including members of the Group Executive Council.
Refer to the section Group Results below for further discussion and for a reconciliation of this non-GAAP measure to Net profit from continuing operations, which is the most directly comparable measure included in our Interim Condensed Consolidated Income Statement. Adjusted net profit should not be considered as a substitute for Net profit from continuing operations, cash flow or other methods of analyzing our results as reported under IFRS.
Adjusted diluted EPS: is calculated by adjusting Diluted earnings per share from continuing operations for the impact per share of the same items excluded from Adjusted net profit.
We believe this non-GAAP measure is useful because it also excludes items that we do not believe are indicative of the Group’s ongoing operating performance and provides investors with a more meaningful comparison of the Group's ongoing quality of earnings.

6



Refer to the section Group Results below for a reconciliation of this non-GAAP measure to Diluted earnings per share from continuing operations, which is the most directly comparable measure included in our Interim Condensed Consolidated Financial Statements. Adjusted diluted EPS should not be considered as a substitute for Basic earnings per share, Diluted earnings per share from continuing operations or other methods of analyzing our quality of earnings as reported under IFRS.
Industrial free cash flows: is our key cash flow metric and is calculated as Cash flows from operating activities less: cash flows from operating activities from discontinued operations; cash flows from operating activities related to financial services, net of eliminations; investments in property, plant and equipment and intangible assets for industrial activities; adjusted for net intercompany payments between continuing operations and discontinued operations; and adjusted for discretionary pension contributions in excess of those required by the pension plans, net of tax. The timing of Industrial free cash flows may be affected by the timing of monetization of receivables and the payment of accounts payable, as well as changes in other components of working capital, which can vary from period to period due to, among other things, cash management initiatives and other factors, some of which may be outside of the Group’s control.
Refer to Liquidity and Capital ResourcesIndustrial free cash flows for further information and the reconciliation of this non-GAAP measure to Cash flows from operating activities, which is the most directly comparable measure included in our Interim Condensed Consolidated Statement of Cash Flows. Industrial free cash flows should not be considered as a substitute for Net profit from continuing operations, cash flow or other methods of analyzing our results as reported under IFRS.
Constant Currency Information: the discussion within section Group Results includes information about our results at constant exchange rates (“CER”), which is calculated by applying the prior year average exchange rates to translate current financial data expressed in local currency in which the relevant financial statements are denominated (see Note 1, Basis of Preparation, within the Interim Condensed Consolidated Financial Statements included elsewhere in this report for the exchange rates applied). Although we do not believe that this non-GAAP measure is a substitute for GAAP measures, we believe that results excluding the effect of currency fluctuations provide additional useful information to investors regarding the operating performance and trends in our business on a local currency basis.

    

7



Group Results
The following is a discussion of the Group's results of operations for the three months ended March 31, 2019 compared to the three months ended March 31, 2018.
 
 
Three months ended March 31
(€ million)
 
2019

2018
Net revenues
 
24,481

 
25,733

Cost of revenues
 
21,181

 
22,003

Selling, general and other costs
 
1,517

 
1,576

Research and development costs
 
673

 
783

Result from investments
 
58

 
82

Restructuring costs
 
204

 
1

Net financial expenses
 
244

 
287

Profit before taxes
 
720

 
1,165

Tax expense
 
212

 
214

Net profit from continuing operations
 
508

 
951

Profit from discontinued operations, net of tax
 
111

 
70

Net profit
 
619

 
1,021

 
 
 
 
 
Net profit attributable to:
 
 
 
 
Owners of the parent
 
615

 
1,016

Non-controlling interests
 
4

 
5

 
 
 
 
 
Net profit from continuing operations attributable to:
 
 
 
 
Owners of the parent
 
509

 
950

Non-controlling interests
 
(1
)
 
1

 
 
 
 
 
Net profit from discontinued operations attributable to:
 
 
 
 
Owners of the parent
 
106

 
66

Non-controlling interests
 
5

 
4

Net revenues
 
 
 
 
 
 
Increase/(Decrease)
 
 
Three months ended March 31
 
2019 vs. 2018
(€ million)
 
2019

2018
 
% Actual
 
% CER
Net revenues
 
24,481


25,733

 
(4.9
)%
 
(8.9
)%
See — Results by Segment below for a discussion of Net revenues for each of our five reportable segments (North America, LATAM, APAC, EMEA and Maserati). During the three months ended March 31, 2019, our previously reported “NAFTA” segment was renamed “North America”, refer to Note 19, Segment reporting for additional information.
Cost of revenues
 
 
 
 
 
 
Increase/(Decrease)
 
 
Three months ended March 31
 
2019 vs. 2018
(€ million)
 
2019
 
2018
 
% Actual
 
% CER
Cost of revenues
 
21,181

 
22,003

 
(3.7
)%
 
(8.0
)%
Cost of revenues as % of Net revenues
 
86.5
%
 
85.5
%
 
 

8



The decrease in Cost of revenues during the three months ended March 31, 2019 compared to the corresponding period in 2018 was primarily related to (i) volume decreases in North America and EMEA, which were partially offset by (ii) increases resulting from foreign currency translation effects.
Included within Cost of revenues for the three months ended March 31, 2019 and 2018 were amounts of €170 million and €82 million, respectively, which represents the accrual of regulatory expenses and the utilization of regulatory credits, primarily in North America and, for the 2019 period, also in EMEA. Cost of revenues also includes significant costs that contribute to regulatory compliance, but which are not separately quantifiable as they are elements within broader initiatives, such as technology deployment in terms of powertrain upgrades and alternative powertrains along with actions to improve vehicle demand energy. Refer to “Environmental and Other Regulatory Matters - Automotive Fuel Economy and Greenhouse Gas Emissions” within our 2018 Annual Report.
Selling, general and other costs
 
 
 
 
 
 
Increase/(Decrease)
 
 
Three months ended March 31
 
2019 vs. 2018
(€ million)
 
2019

2018
 
% Actual
 
% CER
Selling, general and other costs
 
1,517

 
1,576

 
(3.7
)%
 
(6.9
)%
Selling, general and other costs as % of Net revenues
 
6.2
%
 
6.1
%
 
 
Selling, general and other costs include advertising, personnel and other costs. Advertising costs accounted for 47.2 percent and 47.7 percent of total Selling, general and other costs for the three months ended March 31, 2019 and 2018, respectively.
The decrease in Selling, general and other costs during the three months ended March 31, 2019 compared to the corresponding period in 2018 was primarily due to lower advertising expenses in North America.
Research and development costs
 
 
 
 
 
 
Increase/(Decrease)
 
 
Three months ended March 31
 
2019 vs. 2018
(€ million)
 
2019

2018
 
% Actual
 
% CER
Research and development expenditures expensed
 
310

 
401

 
(22.7
)%
 
(26.9
)%
Amortization of capitalized development expenditures
 
347

 
382

 
(9.2
)%
 
(11.5
)%
Impairment and write-off of capitalized development expenditures
 
16

 

 
n.m.

 
n.m.

Total Research and development costs
 
673

 
783

 
(14.0
)%
 
(17.5
)%
________________________________________________________________________________________________________________________________________________
n.m. = not meaningful
 
 
Three months ended March 31
 
 
2019

2018
Research and development expenditures expensed as % of Net revenues
 
1.3
%
 
1.6
%
Amortization of capitalized development expenditures as % of Net revenues
 
1.4
%
 
1.5
%
Impairment and write-off of capitalized development expenditures as % of Net revenues
 
0.1
%
 
%
Total Research and development cost as % of Net revenues
 
2.7
%
 
3.0
%
The decrease in total Research and development costs during the three months ended March 31, 2019 compared to the corresponding period in 2018 was mainly due to the higher capitalization of costs consistent with the progress in the stage of development of models in North America, primarily the Jeep brand, as well as lower amortization expense related to the cycle of the current product range.    

9



Total research and development expenditures during the three months ended March 31, 2019 and 2018 were as follows:
 
 
Three months ended March 31
 
Increase/(Decrease)
(€ million)
 
2019

2018
 
2019 vs. 2018
Capitalized development expenditures
 
605

 
420

 
44.0
 %
Research and development expenditures expensed
 
310

 
401

 
(22.7
)%
Total Research and development expenditures
 
915

 
821

 
11.4
 %
Capitalized development expenditures as % of Total Research and development expenditures
 
66.1
%
 
51.2
%
 


Total Research and development expenditures as % of Net revenues
 
3.7
%
 
3.2
%
 


The 11.4% increase in total Research and development expenditures during the three months ended March 31, 2019 compared to the corresponding period in 2018 reflects the efforts in the renewal and enrichment of our product portfolio in line with the Business Plan.
Net financial expenses
 
 
Three months ended March 31
 
Increase/(Decrease)
(€ million)
 
2019

2018
 
2019 vs. 2018
Net financial expenses
 
244

 
287

 
(15.0
)%
The decrease in Net financial expenses during the three months ended March 31, 2019 compared to the corresponding period in 2018 was primarily due to the continuation of the planned reduction in gross debt.
Tax expense
 
 
Three months ended March 31
 
Increase/(Decrease)
(€ million)
 
2019
 
2018
 
2019 vs. 2018
Tax expense
 
212

 
214

 
(0.9
)%
Effective tax rate
 
29
%
 
18
%
 


The increase in the effective tax rate during the three months ended March 31, 2019, compared to the corresponding period in 2018, primarily related to the non-recurring U.S. tax benefits and adjustments to deferred tax liabilities.
Net profit from continuing operations
 
 
Three months ended March 31
 
Increase/(Decrease)
(€ million)
 
2019
 
2018
 
2019 vs. 2018
Net profit from continuing operations
 
508

 
951

 
(46.6
)%
The decrease in Net profit during the three months ended March 31, 2019 compared to the corresponding period in 2018 was primarily due to (i) lower operating performance in North America, EMEA and Maserati, partially offset by (ii) lower Net financial expenses.
Profit from discontinued operations, net of tax
 
 
Three months ended March 31
 
Increase/(Decrease)
(€ million)
 
2019
 
2018
 
2019 vs. 2018
Profit from discontinued operations, net of tax
 
111

 
70

 
58.6
%
Magneti Marelli is presented as a discontinued operation in the Interim Condensed Consolidated Financial Statements for the three months ended March 31, 2019 and 2018. For more information, refer to Note 2, Scope of consolidation, within our Interim Condensed Consolidated Financial Statements included elsewhere in this Interim Report.

10



Adjusted EBIT
 
 
 
 
 
 
Increase/(Decrease)
 
 
Three months ended March 31
 
2019 vs. 2018
(€ million)
 
2019

2018
 
% Actual
 
% CER
Adjusted EBIT
 
1,067


1,501

 
(28.9
)%
 
(32.4
)%
Adjusted EBIT margin (%)
 
4.4
%
 
5.8
%
 
-140 bps

 
 
The following chart presents the change in Adjusted EBIT by segment for the three months ended March 31, 2019 compared to the corresponding period in 2018.
https://cdn.kscope.io/85a1aa48fbd9855d49e04f95b84b55ef-fcagroupq12019_adjebit.jpg
For the three months ended March 31, 2019 and 2018, the Adjusted EBIT related to Magneti Marelli that was excluded from the Group's Adjusted EBIT result was €146 million and €110 million, respectively. Refer to Note 2, Scope of consolidation in our Interim Condensed Consolidated Financial Statements elsewhere in this Interim Report for additional information regarding the classification of Magneti Marelli as a discontinued operation.
Refer to — Results by Segment below for a discussion of Adjusted EBIT for each of our five reportable segments (North America, LATAM, APAC, EMEA and Maserati).
The following table is the reconciliation of Net profit from continuing operations, which is the most directly comparable measure included in the Interim Condensed Consolidated Income Statement, to Adjusted EBIT:
 
 
Three months ended March 31
(€ million)
 
2019

2018
Net profit from continuing operations
 
508

 
951

Tax expense
 
212

 
214

Net financial expenses
 
244

 
287

Adjustments:
 
 
 
 
Restructuring costs, net of reversals
 
204

 
1

Impairment expense and supplier obligations
 
42

 

U.S. special bonus payment
 

 
111

Recovery of costs for recall - contested with supplier
 

 
(63
)
Brazilian indirect tax - reversal of liability/recognition of credits
 
(164
)
 

Other
 
21

 

Total Adjustments
 
103

 
49

Adjusted EBIT
 
1,067


1,501


11



During the three months ended March 31, 2019, Adjusted EBIT excluded adjustments primarily related to:
€204 million of restructuring costs, primarily related to LATAM, EMEA and North America, of which €77 million related to the write-down of Property, plant and equipment and €127 million related to the recognition of provisions for restructuring. Refer to Note 11, Provisions;
€42 million relating to impairment expense of €36 million in North America and supplier obligations of €6 million in EMEA; and
€164 million of gains in relation to the recognition of credits for amounts paid in prior years in relation to indirect taxes in Brazil (refer to Note 7, Trade and other receivables, in the Interim Condensed Consolidation Financial Statements included elsewhere in this report).
During the three months ended March 31, 2018, Adjusted EBIT excluded adjustments primarily related to:
111 million charge in relation to a special bonus payment, announced on January 11, 2018, to approximately 60,000 hourly and salaried employees in the United States, excluding senior management, as a result of the Tax Cuts and Jobs Act; and
63 million gain from the partial recovery of amounts accrued in 2016 in relation to costs for a recall which were contested with a supplier.
Adjusted net profit
 
 
Three months ended March 31
 
Increase/(Decrease)
(€ million) 
 
2019
 
2018
 
2019 vs. 2018
Adjusted net profit
 
570


963

 
(40.8
)%
The decrease in Adjusted net profit during the three months ended March 31, 2019 compared to the corresponding period in 2018 was primarily due to (i) lower operating performance in North America, EMEA and Maserati, partially offset by (ii) lower Net financial expenses.
The following table summarizes the reconciliation of Net profit from continuing operations, which is the most directly comparable measure included in the Interim Condensed Consolidated Income Statement, to Adjusted net profit:
 
 
Three months ended March 31
(€ million)
 
2019
 
2018
Net profit from continuing operations
 
508

 
951

Adjustments (as above)
 
103

 
49

Tax impact on adjustments
 
(41
)
 
(11
)
Impact of U.S. tax reform
 

 
(26
)
Total adjustments, net of taxes
 
62

 
12

Adjusted net profit
 
570


963

During the three months ended March 31, 2019, Adjusted net profit excluded adjustments related to:
€41 million benefit reflecting the tax impact on the items excluded from Adjusted EBIT above.
During the three months ended March 31, 2018, Adjusted net profit excluded adjustments related to:
€11 million benefit reflecting the tax impact on the items excluded from Adjusted EBIT above; and
€26 million gain relating to the impact of December 2017 U.S. tax reform.    

12



Adjusted diluted earnings per share
 
 
Three months ended March 31
 
Increase/(Decrease)
(€ per share) 
 
2019
 
2018
 
2019 vs. 2018
Adjusted diluted earnings per share
 
0.36

 
0.62

 
(41.9
)%
The following table summarizes the reconciliation of Diluted earnings per share from continuing operations, which is the most directly comparable measure included in the Interim Condensed Consolidated Financial Statements, to Adjusted diluted earnings per share:
 
 
Three months ended March 31
(€ per share except otherwise noted)
 
2019
 
2018
Diluted earnings per share from continuing operations
 
0.32

 
0.61

Impact of adjustments above, net of taxes, on Diluted earnings per share from continuing operations
 
0.04

 
0.01

Adjusted diluted earnings per share
 
0.36

 
0.62

Weighted average number of shares outstanding for Diluted earnings per share from continuing operations (thousand)
 
1,569,868

 
1,566,402



13



Results by Segment
 
 
Net revenues
 
Adjusted EBIT
 
Consolidated Shipments
 
 
Three months ended March 31
(€ million, except shipments which are in thousands of units)
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
North America
 
16,057


16,413

 
1,044


1,216

 
556

 
646

LATAM
 
1,932


1,890

 
105


74

 
120

 
132

APAC
 
592


619

 
(9
)
 
10

 
17

 
19

EMEA
 
5,070


5,640

 
(19
)

182

 
302

 
345

Maserati
 
471


754

 
11


86

 
5

 
9

Other activities
 
671

 
728

 
(50
)
 
(42
)
 

 

Unallocated items & eliminations(1)
 
(312
)
 
(311
)
 
(15
)
 
(25
)
 

 

Total
 
24,481

 
25,733

 
1,067

 
1,501

 
1,000

 
1,151

________________________________________________________________________________________________________________________________________________
(1) Primarily includes intercompany transactions which are eliminated on consolidation

The following is a discussion of Net revenues, Adjusted EBIT and shipments for each of our five reportable segments for the three months ended March 31, 2019 as compared to the three months ended March 31, 2018. We review changes in our results of operations with the following operational drivers:
Volume: reflects changes in products sold to our customers, primarily dealers and fleet customers. Change in volume is driven by industry volume, market share and changes in dealer stock levels. Vehicles manufactured and distributed by our unconsolidated joint ventures are not included within volume;
Mix: generally reflects the changes in product mix, including mix among vehicle brands and models, as well as changes in regional market and distribution channel mix, including mix between retail and fleet customers;
Net price: primarily reflects changes in prices to our customers including higher pricing related to content enhancement, net of discounts, price rebates and other sales incentive programs, as well as related foreign currency transaction effects;
Industrial costs: primarily include cost changes to manufacturing and purchasing of materials that are associated with content and enhancement of vehicle features, as well as industrial efficiencies and inefficiencies, recall campaign and warranty costs, depreciation and amortization, research and development costs and related foreign currency transaction effects;
Selling, general and administrative costs (“SG&A”): primarily include costs for advertising and promotional activities, purchased services, information technology costs and other costs not directly related to the development and manufacturing of our products; and
Other: includes other items not mentioned above, such as foreign currency exchange translation and results from joint ventures and associates.

14



North America
 
 
 
 
 
 
Increase/(Decrease)
 
 
Three months ended March 31
 
2019 vs. 2018
 
 
2019
 
2018
 
% Actual
 
% CER
Shipments (thousands of units)
 
556

 
646

 
(13.9
)%
 

Net revenues (€ million)
 
16,057

 
16,413

 
(2.2
)%
 
(9.2
)%
Adjusted EBIT (€ million)
 
1,044

 
1,216

 
(14.1
)%
 
(21.0
)%
Adjusted EBIT margin (%)
 
6.5
%
 
7.4
%
 
-90 bps

 

Three months ended March 31, 2019
The Group's market share(1) in North America of 11.6 percent for the three months ended March 31, 2019 reflected a decrease of 30 bps from 11.9 percent for the same period in 2018. The U.S. market share(1) of 12.1 percent reflected a decrease of 20 bps from 12.3 percent in the same period in 2018.
Shipments
The decrease in North America shipments in the three months ended March 31, 2019 compared to the same period in 2018 was due to lower Jeep volumes due to non-repeat of overlapping all-new and prior generation Jeep Wrangler models as well as lower Chrysler and Dodge volumes, partially offset by increased Ram volumes.
Net revenues
The slight decrease in North America Net revenues in the three months ended March 31, 2019 compared to the same period in 2018 was primarily due to €1.7 billion from lower volumes substantially offset by €1.2 billion favorable foreign exchange translation effects and €0.1 billion from positive net pricing.
Adjusted EBIT
The following chart reflects the change in North America Adjusted EBIT by operational driver for the three months ended March 31, 2019 compared to the same period in 2018.
https://cdn.kscope.io/85a1aa48fbd9855d49e04f95b84b55ef-northamericaq12019_adjdebit.jpg





_______________________________________________________________________________________________________________________________________________
(1) Our estimated market share data presented are based on management’s estimates of industry sales data, which use certain data provided by third-party sources, including IHS Markit and Ward’s Automotive.

15



The decrease in North America Adjusted EBIT in the three months ended March 31, 2019 compared to the same period in 2018 was primarily due to:
lower volumes and increased compliance costs.
This was partially offset by:
positive net pricing, mainly related to new vehicles;
lower industrial costs, which mainly related to lower launch costs, and purchasing efficiencies;
lower SG&A primarily relating to a reduction in advertising costs; and
favorable foreign currency translation effects.

16



LATAM
 
 
 
 
 
 
Increase/(Decrease)
 
 
Three months ended March 31
 
2019 vs. 2018
 
 
2019
 
2018
 
% Actual
 
% CER
Shipments (thousands of units)
 
120

 
132

 
(9.1
)%
 

Net revenues (€ million)
 
1,932

 
1,890

 
2.2
 %
 
10.4
%
Adjusted EBIT (€ million)
 
105

 
74

 
41.9
 %
 
68.3
%
Adjusted EBIT margin (%)
 
5.4
%
 
3.9
%
 
+150 bps

 

Three months ended March 31, 2019
The Group's market share(1) in LATAM increased 160 bps to 13.5 percent for the three months ended March 31, 2019 from 11.9 percent in the same period in 2018. The Group's market share in Brazil and Argentina for the three months ended March 31, 2019 increased 230 bps to 18.6 percent from 16.3 percent and decreased 60 bps to 12.0 percent from 12.6 percent, respectively, compared to the corresponding period in 2018.
Shipments
The decrease in LATAM shipments in the three months ended March 31, 2019, compared to the same period in 2018 was primarily due to the Argentina market decline, partially offset by increased volumes in Brazil.
Net revenues
The slight increase in LATAM Net revenues in the three months ended March 31, 2019 compared to the same period in 2018 primarily related to positive net pricing, partially offset by lower volumes and negative foreign exchange effects.
Adjusted EBIT
The following chart reflects the change in LATAM Adjusted EBIT by operational driver for the three months ended March 31, 2019 compared to the same period in 2018.
https://cdn.kscope.io/85a1aa48fbd9855d49e04f95b84b55ef-latamq12019_adjebit.jpg
    




________________________________________________________________________________________________________________________________________________
(1) Our estimated market share data presented are based on management’s estimates of industry sales data, which use certain data provided by third-party sources, including IHS Markit, National Organization of Automotive Vehicles Distribution and Association of Automotive Producers.

17



The increase in LATAM Adjusted EBIT in the three months ended March 31, 2019 compared to the same period in 2018 was primarily due to:
positive net pricing, largely driven by one-off recognition of credits relating to indirect taxes as a result of a specific tax ruling (not related to the COFINS over ICMS below); and
lower SG&A, which mainly related to lower advertising spend.
These were partially offset by:
decreased volumes;
higher industrial costs, mainly from lower export tax benefits; and
negative foreign currency effects.
Amounts totaling €164 million for credits recognized in relation to a definitive favorable court decision in the COFINS over ICMS litigation in Brazil were excluded from Adjusted EBIT, consistent with the treatment of the related recognition of previous credits in 2018 and the reversal of an indirect tax liability in 2017. Refer to Note 7, Trade and other receivables and the Group's Consolidated Financial Statements for the years ended 2018 and 2017 for further information.

18



APAC
 
 
 
 
 
 
Increase/(Decrease)
 
 
Three months ended March 31
 
2019 vs. 2018
 
 
2019
 
2018
 
% Actual
 
% CER
Combined shipments (thousands of units)
 
39

 
56

 
(30.4
)%
 

Consolidated shipments (thousands of units)
 
17

 
19

 
(10.5
)%
 

Net revenues (€ million)
 
592

 
619

 
(4.4
)%
 
(6.8
)%
Adjusted EBIT (€ million)
 
(9
)
 
10

 
n.m.

 
n.m.

Adjusted EBIT margin (%)
 
(1.5
)%
 
1.6
%
 
-310 bps

 

________________________________________________________________________________________________________________________________________________
n.m. = number not meaningful
We locally produce and distribute the Jeep Cherokee, Jeep Renegade, Jeep Compass and all-new Jeep Grand Commander through the 50% owned GAC Fiat Chrysler Automobiles Co (“GAC FCA JV”). The results of the GAC FCA JV are accounted for using the equity method, with recognition of our share of the net income of the joint venture in the line item “Result from investment” within the Consolidated Income Statement. We also produce the Jeep Compass through our joint operation with Fiat India Automobiles Private Limited (“FIAPL”) and we recognize our related interest in the joint operation on a line by line basis. 
Shipments distributed by our consolidated subsidiaries, which includes vehicles produced by FIAPL, are reported in both consolidated and combined shipments. Shipments of the GAC FCA JV are not included in consolidated shipments and are only in combined shipments.
Three months ended March 31, 2019
Shipments
The decrease in combined shipments in the three months ended March 31, 2019 compared to the same period in 2018 was primarily due to decreased volumes in China.
The decrease in consolidated shipments in the three months ended March 31, 2019 compared to the same period in 2018 was mainly due to decreased volumes in India and Australia.
Net revenues
The decrease in APAC Net revenues in the three months ended March 31, 2019 compared to the same period in 2018 was primarily due to lower volumes and negative net pricing, partially offset by favorable mix and positive foreign exchange effects.

19



Adjusted EBIT
The following chart reflects the change in APAC Adjusted EBIT by operational driver for the three months ended March 31, 2019 compared to the same period in 2018.
https://cdn.kscope.io/85a1aa48fbd9855d49e04f95b84b55ef-apacq12019_adjebit.jpg
The decrease in APAC Adjusted EBIT in the three months ended March 31, 2019 compared to the same period in 2018 was primarily due to:
negative net pricing due to higher incentives;
lower results from the GAC JV, included within Other; and
negative foreign currency effects.
These were partially offset by:
improved mix, partially offset by lower volumes; and
lower industrial and SG&A costs.

20



EMEA
 
 
 
 
 
 
Increase/(Decrease)
 
 
Three months ended March 31
 
2019 vs. 2018
 
 
2019
 
2018
 
% Actual
 
% CER
Combined shipments (thousands of units)
 
317

 
361

 
(12.2
)%
 

Consolidated shipments (thousands of units)
 
302

 
345

 
(12.5
)%
 

Net revenues (€ million)
 
5,070

 
5,640

 
(10.1
)%
 
(10.3
)%
Adjusted EBIT (€ million)
 
(19
)
 
182

 
n.m.

 
n.m.

Adjusted EBIT margin (%)
 
(0.4
)%
 
3.2
%
 
-360 bps

 

________________________________________________________________________________________________________________________________________________
n.m. = number not meaningful
Three months ended March 31, 2019    
The Group's market share(1) in the European Union for the three months ended March 31, 2019, decreased 70 bps to 6.6 percent from 7.3 percent in the same period in 2018.
Shipments
The decrease in EMEA combined and consolidated shipments in the three months ended March 31, 2019 compared to the same period in 2018, was primarily due to planned optimization of sales channel mix as well as lower Fiat and Alfa Romeo volumes, with the discontinuation of Punto and Mito, were partially offset by increased Jeep volumes.
Net revenues
The decrease in EMEA Net revenues in the three months ended March 31, 2019 compared to the same period in 2018, was primarily due to lower volumes partially offset by favorable mix.
Adjusted EBIT
The following chart reflects the change in EMEA Adjusted EBIT by operational driver for the three months ended March 31, 2019 compared to the same period in 2018.
https://cdn.kscope.io/85a1aa48fbd9855d49e04f95b84b55ef-emeaq12019_adjebit.jpg


________________________________________________________________________________________________________________________________________________
(1) Our estimated market share data is presented based on the European Automobile Manufacturers Association (ACEA) Registration Databases and national Registration Offices databases.

21




The decrease in EMEA Adjusted EBIT in the three months ended March 31, 2019 compared to the same period in 2018 was primarily due to:
lower volumes;
negative net pricing due to higher incentives; and
increased industrial costs reflecting negative foreign exchange transaction impacts and increased compliance costs, partially offset by warranty and inventory cost adjustments.

22



Maserati
 
 
 
 
 
 
Increase/(Decrease)
 
 
Three months ended March 31
 
2019 vs. 2018
 
 
2019
 
2018
 
% Actual
 
% CER
Shipments (thousands of units)
 
5.5

 
9.4

 
(41.5
)%
 

Net revenues (€ million)
 
471

 
754

 
(37.5
)%
 
(39.4
)%
Adjusted EBIT (€ million)
 
11

 
86

 
(87.2
)%
 
(88.2
)%
Adjusted EBIT margin (%)
 
2.3
%
 
11.4
%
 
-910 bps

 

________________________________________________________________________________________________________________________________________________
n.m. = number not meaningful
Three months ended March 31, 2019
Shipments
The decrease in Maserati shipments in the three months ended March 31, 2019 compared to the same period in 2018 was mainly due to lower Levante and Ghibli volumes, partially due to planned inventory management actions.
Net revenues
The decrease in Maserati Net revenues in the three months ended March 31, 2019 compared to the same period in 2018 was primarily due to lower volumes partially offset by foreign currency effects.
Adjusted EBIT
The decrease in Maserati Adjusted EBIT in the three months ended March 31, 2019 compared to the same period in 2018 was primarily due to lower volumes.

23



Liquidity and Capital Resources
Available Liquidity
The following table summarizes our total available liquidity:
(€ million)
At March 31, 2019
 
At December 31, 2018
Cash, cash equivalents and current debt securities(1)
12,162

 
12,669

Undrawn committed credit lines(2)
7,725

 
7,728

Cash, cash equivalents and current debt securities - included within Assets held for sale
424

 
728

Available liquidity(3)
20,311

 
21,125

________________________________________________________________________________________________________________________________________________
(1) Current debt securities are comprised of short term or marketable securities which represent temporary investments that do not satisfy all the requirements to be classified as cash equivalents as they may not be readily convertible to cash or they are subject to significant risk of change in value (even if they are short-term in nature or marketable).
(2) Excludes the undrawn €0.1 billion long-term dedicated credit lines available to fund scheduled investments at March 31, 2019 (€0.1 billion was undrawn at December 31, 2018).
(3) The majority of our liquidity is available to our treasury operations in Europe and U.S.; however, liquidity is also available to certain subsidiaries which operate in other areas. Cash held in such countries may be subject to restrictions on transfer depending on the foreign jurisdictions in which these subsidiaries operate. Based on our review of such transfer restrictions in the countries in which we operate and maintain material cash balances, we do not believe such transfer restrictions had an adverse effect on the Group’s ability to meet its liquidity requirements at the dates above.
Available liquidity at March 31, 2019 decreased €0.8 billion from December 31, 2018 primarily of as a result of the negative industrial free cash flow (including discontinued operations) and net repayment of debts, partially offset by the decrease in the portfolio of financial services activities and positive foreign translation effects. Our available liquidity is subject to intra-month and seasonal fluctuations resulting from business and collection-payment cycles as well as to changes in foreign exchange conversion rates. Refer to the section — Cash Flows below for additional information regarding the change in cash and cash equivalents.
Our liquidity is principally denominated in U.S. Dollar and in Euro, with the remainder being distributed in various countries and denominated in the relevant local currencies. Out of the total cash, cash equivalents and current debt securities available at March 31, 2019, €7.4 billion, or 58.7 percent, were denominated in U.S. Dollar (€7.8 billion, or 58.2 percent, at December 31, 2018) and €1.7 billion, or 13.5 percent, were denominated in Euro (€1.9 billion, or 14.2 percent, at December 31, 2018).
At March 31, 2019 and December 31, 2018, undrawn committed credit lines totaling €7.7 billion included the €6.25 billion syndicated revolving credit facility, as described below, and approximately €1.5 billion of other revolving credit facilities.
Revolving Credit Facilities
In March 2019, the Group amended its syndicated revolving credit facility originally signed in June 2015 and previously amended in March 2017 and March 2018 (as amended, the “RCF”). The amendment extended the RCF’s final maturity to March 2024. The RCF, which is available for general corporate purposes and for the working capital needs of the Group, is structured in two tranches: €3.125 billion with a 37-month tenor and two extension options of 1-year and of 11-months exercisable on the first and second anniversary of the amendment signing date, respectively; and €3.125 billion with a 60-month tenor. The amendment was accounted for as a debt modification and, as a result, the new costs associated with the March 2019 amendment as well as the remaining unamortized debt issuance costs related to the original €5.0 billion RCF and the previous March 2017 and 2018 amendments will be amortized over the life of the amended RCF.

24



Cash Flows
The following table summarizes the cash flows from operating, investing and financing activities for the three months ended March 31, 2019 and 2018. Refer to our Interim Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018 included elsewhere in this Interim Report for additional detail.
 
 
Three months ended March 31
(€ million)
 
2019(1)
 
2018(1)
Cash flows from operating activities - continuing operations
 
1,070

 
2,213

Cash flows from operating activities - discontinued operations
 
(371
)
 
135

Cash flows used in investing activities - continuing operations
 
(853
)
 
(1,648
)
Cash flows used in investing activities - discontinued operations
 
(113
)
 
(125
)
Cash flows used in financing activities - continuing operations
 
(763
)
 
(1,327
)
Cash flows used in financing activities - discontinued operations
 
(48
)
 
(63
)
Translation exchange differences
 
231

 
(244
)
Total change in cash and cash equivalents
 
(847
)
 
(1,059
)
 
 
 
 
 
Cash and cash equivalents at beginning of the period
 
12,450

 
12,638

Add: cash and cash equivalents at beginning of the period - included with Assets held for sale
 
719

 

Total change in cash and cash equivalents
 
(847
)
 
(1,059
)
Less: Cash and cash equivalents at end of the period - included within Assets held for sale
 
418

 

Cash and cash equivalents at end of the period
 
11,904

 
11,579

________________________________________________________________________________________________________________________________________________
(1) The cash flows of the Group for the three months ended March 31, 2018 have been re-presented following the classification of the Magneti Marelli business unit as a discontinued operation in the Interim Report as of and for the three and nine months ended September 30, 2018 and in the Annual Report for the year ended December 31, 2018; Magneti Marelli operating results were excluded from the Group's continuing operations and are presented as a single line item within the Interim Condensed Consolidated Income Statement for each of the periods presented. The assets and liabilities of Magneti Marelli have been classified as Assets held for sale and Liabilities held for sale within the Interim Condensed Consolidated Statement of Financial Position at March 31, 2019 and December 31, 2018. All amounts presented above exclude net intercompany payments from Magneti Marelli to the Group totaling €65 million and €67million within operating activities, €(3) million and nil within investing activities and €(288) million and €(106) million within financing activities for the three months ended March 31, 2019 and 2018, respectively.
Operating Activities
For the three months ended March 31, 2019, cash flows from operating activities were the result of Net profit from continuing operations of €508 million primarily adjusted: (1) to add back €1,383 million for depreciation and amortization expense, (2) a €54 million change in deferred taxes, (3) a €201 million net increase in provisions, primarily due to restructuring in LATAM, EMEA and North America (refer to Note 11, Provisions, in the Interim Condensed Consolidation Financial Statements included elsewhere in this report), (4) €371 million of cash used by operating activities of discontinued operations and (5) for the negative effect of the change in working capital of €651 million, which was primarily driven by (i) an increase of €792 million in inventories mainly due increased volumes of production in North America in January to March 2019 as compared to October to December 2018, (ii) an increase of €244 million in trade receivables, (iii) an increase of €85 million in other receivables net of other payables, mainly due to an increase in indirect tax receivables, which were partially offset by (iv) an increase of €470 million in trade payables due to increased production volumes in North America compared to October to December 2018, partially offset by a seasonal decrease in EMEA.
For the three months ended March 31, 2018, cash flows from operating activities were the result of Net profit from continuing operations of €951 million primarily adjusted: (1) to add back €1,440 million for depreciation and amortization expense, (2) €135 million of cash from operating activities of discontinued operations and (3) for the negative effect of the change in working capital of €369 million, which was primarily driven by (i) an increase of €927 million in inventories mainly due to the launch of new models in North America and LATAM as well as an increase in production volumes compared to year-end December 2017, leading to higher levels of work-in-progress and raw materials, (ii) an increase of €135 million in trade receivables and (iii) an increase of €222 million in other receivables net of other payables, mainly due to an increase in indirect tax receivables, which were partially offset by (iv) an increase of €915 million in trade payables mainly due to increased production volumes in North America compared to year-end December 2017.



25



Investing Activities
For the three months ended March 31, 2019, cash used in investing activities was primarily the result of €1,376 million of capital expenditures, including €605 million of capitalized development expenditures, partially offset by a decrease in receivables from financing activities of €578 million, which was mainly attributable to lower volumes of dealer financing in EMEA and LATAM, in addition to lower volumes of factoring transactions, and €113 million of cash flows used by discontinued operations.
For the three months ended March 31, 2018, cash used in investing activities was primarily the result of €1,254 million of capital expenditures, including €420 million of capitalized development expenditures, an increase in
receivables from financing activities of €440 million, which was mainly attributed to increased dealer financing and €125 million of cash flows used by discontinued operations.

Financing Activities
For the three months ended March 31, 2019, cash used in financing activities was primarily the result of the repayment of debt in Brazil and reduced funding needs for financial services (in relation to reduced receivable portfolio outstanding).
For the three months ended March 31, 2018, cash used in financing activities was primarily the result of the repayment of a note at maturity with a principal amount of €1,250 million that was issued through the Medium Term Note Programme (“MTN Programme”) and €63 million of cash flows used by discontinued operations.
Industrial free cash flows
The following table provides a reconciliation of Cash flows from operating activities, the most directly comparable measure included in our Interim Condensed Consolidated Statement of Cash Flows, to Industrial free cash flows for the three months ended March 31, 2019 and 2018:
 
Three months ended March 31
(€ million)
2019
 
2018
Cash flows from operating activities
699

 
2,348

Less: Cash flows from operating activities - discontinued operations
(371
)
 
135

Cash flows from operating activities - continuing operations
1,070

 
2,213

Less: Operating activities not attributable to industrial activities
29

 
16

Less: Capital expenditures for industrial activities
1,376

 
1,254

Add: Net intercompany payments between continuing operations and discontinued operations
65

 
67

Add: Discretionary pension contribution, net of tax

 

Industrial free cash flows
(270
)
 
1,010

For the three months ended March 31, 2019 Industrial free cash flows from continuing operations decreased by €1,280 million as compared to the same period in 2018, primarily due to lower cash flows from operations.


26



Risks and Uncertainties
The Group believes that the risks and uncertainties identified for the three months ended March 31, 2019 are in line with the main risks and uncertainties to which the Group is exposed and that were identified and discussed in the section Risk Management-Risk Factors in the Group's Annual Report and Form 20-F for the year ended December 31, 2018 filed with the AFM and the SEC on February 22, 2019. Those risks and uncertainties should be read in conjunction with this Interim Report.

27



Outlook
Guidance confirmed:
Adjusted EBIT
> €6.7 billion
Adjusted EBIT margin
> 6.1 %
Adjusted diluted EPS
> €2.70 per share
Industrial free cash flows
> €1.5 billion


28



INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2019

29



FIAT CHRYSLER AUTOMOBILES N.V. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT
(in € million, except per share amounts)
(Unaudited)
 
 
 
Three months ended March 31
 
Note
 
2019
 
2018
Net revenues
3
 
24,481

 
25,733

Cost of revenues
 
 
21,181

 
22,003

Selling, general and other costs
 
 
1,517

 
1,576

Research and development costs
 
 
673

 
783

Result from investments
 
 
58

 
82

Restructuring costs
11
 
204

 
1

Net financial expenses
4
 
244


287

Profit before taxes
 
 
720

 
1,165

Tax expense
5
 
212

 
214

Net profit from continuing operations
 
 
508

 
951

Profit from discontinued operations, net of tax
 
 
111

 
70

Net profit
 
 
619


1,021

 
 
 
 
 
 
Net profit attributable to:
 
 
 
 
 
Owners of the parent
 
 
615

 
1,016

Non-controlling interests
 
 
4

 
5

 
 
 
619

 
1,021

 
 
 
 
 
 
Net profit from continuing operations attributable to:
 
 
 
 
 
Owners of the parent
 
 
509

 
950

Non-controlling interests
 
 
(1
)
 
1

 
 
 
508

 
951

 
 
 
 
 
 
Earnings per share:
18
 
 
 
 
Basic earnings per share
 
 
0.40

 
0.66

Diluted earnings per share
 
 
0.39

 
0.65

 
 
 
 
 
 
Earnings per share from continuing operations:
18
 
 
 
 
Basic earnings per share
 
 
0.33

 
0.62

Diluted earnings per share
 
 
0.32

 
0.61














The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.

30



FIAT CHRYSLER AUTOMOBILES N.V. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in € million)
(Unaudited) 
 
 
 
Three months ended March 31
 
Note
 
2019
 
2018
Net profit (A)
 
 
619

 
1,021

 
 
 
 
 
 
Items that will not be reclassified to the Consolidated Income Statement in subsequent periods:
17
 
 
 
 
Gains/(losses) on re-measurement of defined benefit plans
 
 



Gains/(losses) on equity instruments measured at fair value through other comprehensive income
 
 

 

Share of gains/(losses) on remeasurement of defined benefit plans for
equity method investees
 
 

 

Related tax impact
 
 

 

Items relating to discontinued operations, net of tax
 
 

 

Total items that will not be reclassified to the Consolidated Income Statement in subsequent periods (B1)
 
 

 

 
 
 
 
 
 
Items that may be reclassified to the Consolidated Income Statement in subsequent periods:
17
 
 
 
 
(Losses)/gains on cash flow hedging instruments
 
 
(98
)

103

Exchange gains/(losses) on translating foreign operations
 
 
436


(439
)
Share of Other comprehensive (loss) for equity method investees
 
 
(4
)

(28
)
Related tax impact
 
 
27

 
(28
)
Items relating to discontinued operations, net of tax
 
 
13

 
1

Total items that may be reclassified to the Consolidated Income Statement in subsequent periods (B2)
 
 
374

 
(391
)
 
 
 
 
 
 
Total Other comprehensive income/(loss), net of tax (B1)+(B2)=(B)
 
 
374


(391
)
 
 
 
 
 
 
Total Comprehensive income (A)+(B)
 
 
993

 
630

 
 
 
 
 
 
Total Comprehensive income attributable to:
 
 
 
 
 
Owners of the parent
 
 
986

 
627

Non-controlling interests
 
 
7

 
3

 
 
 
993

 
630

 
 
 
 
 
 
Total Comprehensive income attributable to owners of the parent:
 
 
 
 
 
Continuing operations
 
 
869

 
558

Discontinued operations
 
 
117

 
69

 
 
 
986

 
627







The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.

31



FIAT CHRYSLER AUTOMOBILES N.V. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in € million)
(Unaudited)
 
Note
 
At March 31, 2019
 
At December 31, 2018
Assets
 
 
 
 
 
Goodwill and intangible assets with indefinite useful lives
6
 
14,266

 
13,970

Other intangible assets
 
 
12,178

 
11,749

Property, plant and equipment
 
 
27,452

 
26,307

Investments accounted for using the equity method
 
 
2,019

 
2,002

Other financial assets
 
 
314

 
362

Deferred tax assets
 
 
1,827

 
1,814

Other receivables
7
 
2,101

 
1,484

Tax receivables
 
 
84

 
71

Prepaid expenses and other assets
 
 
254

 
266

Other non-current assets
 
 
583

 
556

Total Non-current assets
 
 
61,078

 
58,581

Inventories
8
 
11,591


10,694

Assets sold with a buy-back commitment
 
 
1,716

 
1,707

Trade and other receivables
7
 
6,784

 
7,188

Tax receivables
 
 
337

 
419

Prepaid expenses and other assets
 
 
419

 
418

Other financial assets
 
 
589


615

Cash and cash equivalents
 
 
11,904

 
12,450

Assets held for sale
 
 
5,194

 
4,801

Total Current assets
 
 
38,534


38,292

Total Assets
 
 
99,612

 
96,873

Equity and liabilities
 
 
 
 
 
Equity
17
 
 
 
 
Equity attributable to owners of the parent
 
 
25,703

 
24,702

Non-controlling interests
 
 
203

 
201

Total Equity
 
 
25,906

 
24,903

Liabilities
 
 
 
 
 
Long-term debt
12
 
9,484

 
8,667

Employee benefits liabilities
10
 
8,083

 
7,875

Provisions
11
 
5,668

 
5,561

Other financial liabilities
 
 
15

 
3

Deferred tax liabilities
 
 
960

 
937

Tax payables
 
 
1

 
1

Other liabilities
13
 
2,413

 
2,452

Total Non-current liabilities
 
 
26,624

 
25,496

Trade payables
 
 
20,039

 
19,229

Short-term debt and current portion of long-term debt
12
 
5,525


5,861

Other financial liabilities
 
 
226

 
204

Employee benefits liabilities
10
 
479

 
595

Provisions
11
 
10,582

 
10,483

Tax payables
 
 
117

 
114

Other liabilities
13
 
7,145

 
7,057

Liabilities held for sale
 
 
2,969

 
2,931

Total Current liabilities
 
 
47,082

 
46,474

Total Equity and liabilities
 
 
99,612

 
96,873

The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.

32



FIAT CHRYSLER AUTOMOBILES N.V. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in € million)
(Unaudited)
 
 
 
Three months ended March 31
 
Note
 
2019
 
2018
Cash flows from operating activities:
 
 
 
 
 
Net profit from continuing operations
 
 
508

 
951

Amortization and depreciation
 
 
1,383

 
1,440

Change in inventories, trade and other receivables and payables
 
 
(651
)
 
(369
)
Dividends received
 
 
56

 
66

Change in provisions
 
 
(201
)
 
46

Change in deferred taxes
 
 
54

 
(61
)
Other changes
 
 
(79
)
 
140

Cash flows from operating activities - discontinued operations
 
 
(371
)
 
135

Total
 
 
699

 
2,348

Cash flows used in investing activities:
 
 
 
 
 
Investments in property, plant and equipment and intangible assets
 
 
(1,376
)
 
(1,254
)
Net change in receivables from financing activities
 
 
578

 
(440
)
Change in securities
 
 

 
5

Other changes
 
 
(55
)
 
41

Cash flows used in investing activities - discontinued operations
 
 
(113
)
 
(125
)
Total
 
 
(966
)
 
(1,773
)
Cash flows used in financing activities:
 
 
 
 
 
Repayment of notes
12
 

 
(1,250
)
Proceeds of other long-term debt
 
 
124

 
380

Repayment of other long-term debt
12
 
(293
)
 
(386
)
Net change in short-term debt and other financial assets/liabilities
 
 
(589
)
 
(82
)
Distributions paid
 
 
(5
)
 

Other changes
 
 

 
11

Cash flows used in financing activities - discontinued operations
 
 
(48
)
 
(63
)
Total
 
 
(811
)
 
(1,390
)
Translation exchange differences
 
 
231

 
(244
)
Total change in Cash and cash equivalents
 
 
(847
)
 
(1,059
)
 
 
 
 
 
 
Cash and cash equivalents at beginning of the period
 
 
12,450

 
12,638

Add: Cash and cash equivalents at beginning of the period - included within Assets held for sale
 
 
719

 

Total change in Cash and cash equivalents
 
 
(847
)
 
(1,059
)
Less: Cash and cash equivalents at end of the period - included within Assets held for sale
 
 
418

 

Cash and cash equivalents at end of the period
 
 
11,904

 
11,579











The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.

33



FIAT CHRYSLER AUTOMOBILES N.V. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(in € million)
(Unaudited)
 
Attributable to owners of the parent 
 
 
 
 
 
Share capital
 
Other reserves
 
Cash flow hedge reserve
 
Currency translation differences
 
Financial Assets measured at FVOCI
 
Remeasure-ment of defined benefit plans
 
Cumulative share of OCI of equity method investees
 
Non-controlling interests
 
Total
At December 31, 2017
19

 
20,921

 
68

 
970

 
3

 
(810
)
 
(352
)
 
168

 
20,987

Impact from the adoption of IFRS 15 and IFRS 9

 
21

 

 

 

 

 

 

 
21

At January 1, 2018
19

 
20,942

 
68

 
970

 
3

 
(810
)
 
(352
)
 
168

 
21,008

Capital increase

 

 

 

 

 

 

 
11

 
11

Net profit

 
1,016

 

 

 

 

 

 
5

 
1,021

Other comprehensive income/(loss)

 

 
75

 
(436
)
 

 

 
(28
)
 
(2
)
 
(391
)
Share-based compensation(1)

 
54

 

 

 

 

 

 

 
54

Other changes

 
2

 

 

 

 

 

 
(1
)
 
1

At March 31, 2018
19

 
22,014

 
143

 
534

 
3

 
(810
)
 
(380
)
 
181

 
21,704

________________________________________________________________________________________________________________________________________________
(1) Includes €29 million tax benefit related to the long-term incentive plans.
 
Attributable to owners of the parent 
 
 
 
 
 
Share capital
 
Other reserves
 
Cash flow hedge reserve
 
Currency translation differences
 
Financial Assets measured at FVOCI
 
Remeasure-ment of defined benefit plans
 
Cumulative share of OCI of equity method investees
 
Non-controlling interests
 
Total
At December 31, 2018
19

 
24,650

 
45

 
1,011

 
(1
)
 
(567
)
 
(455