6-K FCA NV Q2 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 July 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 o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule101(b)(1): o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule101(b)(7): o




















 






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F-3 (File No. 333-217806) and to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished: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. Semi-Annual Report as of and for the three and six months ended June 30, 2019

The following exhibits are furnished herewith:
Exhibit 99.2
Fiat Chrysler Automobiles N.V. Supplemental information as of and for the three and six months ended June 30, 2019
Exhibit 99.3
Fiat Chrysler Automobiles N.V. Supplemental information as of and for the three and six months ended June 30, 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: July 31, 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. Semi-Annual Report as of and for the three and six months ended June 30, 2019
99.2
Fiat Chrysler Automobiles N.V. Supplemental information as of and for the three and six months ended June 30, 2019
99.3
Fiat Chrysler Automobiles N.V. Supplemental information as of and for the three and six months ended June 30, 2019



Exhibit 99.1 FCA NV 2019.06.30 Semi-Annual Report
Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13033722&doc=9
Semi-Annual Report
As of and for the three and six months ended June 30, 2019




TABLE OF CONTENTS
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



CERTAIN DEFINED TERMS
In this Semi-Annual 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 or any one or more of them, as the context may require. References in this Semi-Annual Report to “FCA N.V.” refer solely to Fiat Chrysler Automobiles N.V. References to “FCA US” refer to FCA US LLC, together with its direct and indirect subsidiaries.
All references in this Semi-Annual 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 (“U.S.”).
Forward-Looking Statements
Statements contained in this Semi-Annual 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 Semi-Annual Report.
Furthermore, in light of the inherent difficulty in forecasting future results, any estimates or forecasts of particular periods that are provided in this Semi-Annual 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 Semi-Annual 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 Semi-Annual Report.



    

4



MANAGEMENT DISCUSSION AND ANALYSIS
Highlights - from continuing operations
Our former Magneti Marelli business was classified as a discontinued operation for the three and six months ended June 30, 2019 up to the completion of the sale transaction on May 2, 2019 and for the three and six months ended June 30, 2018. Refer to Note 2, Scope of consolidation in our Semi-Annual Condensed Consolidated Financial Statements elsewhere in this Semi-Annual Report for additional information. Unless otherwise stated, all figures below exclude results from discontinued operations:
Three months ended June 30
 
 
 
Six months ended June 30
2019
 
2018
 
(€ million, except shipments, which are in thousands of units, and per share amounts)
 
2019
 
2018
1,157

 
1,301

 
Combined shipments(1)
 
2,194

 
2,505

1,128

 
1,250

 
Consolidated shipments(2)
 
2,128

 
2,401

 
 
 
 
 
 
 
 
 
26,741

 
27,611

 
Net revenues
 
51,222

 
53,344

1,527

 
1,534

 
Adjusted EBIT(3)
 
2,594

 
3,035

793

 
694

 
Net profit from continuing operations
 
1,301

 
1,645

928

 
909

 
Adjusted net profit(4)
 
1,498

 
1,872

3,859

 
60

 
Profit from discontinued operations, net of tax(5)
 
3,970

 
130

4,652

 
754

 
Net profit (including discontinued operations)
 
5,271

 
1,775

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share - including discontinued operations(6)
 
 
 
 
2.97

 
0.48

 
Basic earnings per share (€)
 
3.37

 
1.14

2.96

 
0.48

 
Diluted earnings per share (€)
 
3.35

 
1.13

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share from continuing operations(6)
 
 
 
 
0.50

 
0.45

 
Basic earnings per share (€)
 
0.83

 
1.06

0.50

 
0.44

 
Diluted earnings per share (€)
 
0.83

 
1.05

 
 
 
 
 
 
 
 
 
0.59

 
0.58

 
Adjusted diluted earnings per share(7)
 
0.96

 
1.19

 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends paid, per share
 
 
 
 
0.65

 

 
Ordinary dividends paid, per share (€)
 
0.65

 

1.30

 

 
Extraordinary dividends paid, per share (€)
 
1.30

 

 
Six months ended June 30
(€ million)
2019
 
2018
Cash flows from operating activities
3,751

 
5,184

Of which: Cash flows from continuing operations(8)
4,059

 
4,822

Of which: Cash flows (used in)/from discontinued operations(8)
(308
)
 
362

Industrial free cash flows(9)
484

 
2,509

________________________________________________________________________________________________________________________________________________
(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 Semi-Annual Report for further discussion.
(4) Refer to sections — Non-GAAP Financial Measures and Group Results in this Semi-Annual Report for further discussion.
(5) Profit from discontinued operations, net of tax for the three and six months ended June 30, 2019 includes the €3,811 million gain on disposal of Magneti Marelli and related tax expense of €2 million.
(6) Refer to Note 18, Earnings per share, in the Semi-Annual Condensed Consolidated Financial Statements included in this Semi-Annual Report.
(7) Refer to sections - Non-GAAP Financial Measures and Group Results in this Semi-Annual Report for further discussion.
(8) Includes only cash flows relating to third parties and excluding intercompany of €(200) million and €150 million for the six months ended June 30, 2019 and 2018 respectively.
(9) Amounts exclude discontinued operations. Refer to section — Non-GAAP Financial Measures and Liquidity and Capital Resources in this Semi-Annual 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 and the achievement of certain performance objectives established under the terms of the 2019-2021 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 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 Semi-Annual 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 2014-2018 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 Semi-Annual 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 Semi-Annual 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 Semi-Annual 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 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 Semi-Annual 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 and six months ended June 30, 2019 compared to the three and six months ended June 30, 2018.
Three months ended June 30
 
 
 
Six months ended June 30
2019
 
2018
 
(€ million)
 
2019
 
2018
26,741

 
27,611

 
Net revenues
 
51,222

 
53,344

23,089

 
23,841

 
Cost of revenues
 
44,270

 
45,844

1,573

 
1,741

 
Selling, general and other costs
 
3,090

 
3,317

782

 
761

 
Research and development costs
 
1,455

 
1,544

58

 
69

 
Result from investments
 
116

 
151

7

 

 
Gains on disposal of investments
 
7

 

(8
)
 
1

 
Restructuring costs
 
196

 
2

260

 
265

 
Net financial expenses
 
504

 
552

1,110

 
1,071

 
Profit before taxes
 
1,830

 
2,236

317

 
377

 
Tax expense
 
529

 
591

793

 
694

 
Net profit from continuing operations
 
1,301

 
1,645

3,859

 
60

 
Profit from discontinued operations, net of tax
 
3,970

 
130

4,652

 
754

 
Net profit
 
5,271

 
1,775

 
 
 
 
 
 
 
 
 
 
 
 
 
Net profit attributable to:
 
 
 
 
4,650

 
748

 
Owners of the parent
 
5,265

 
1,764

2

 
6

 
Non-controlling interests
 
6

 
11

 
 
 
 
 
 
 
 
 
 
 
 
 
Net profit from continuing operations attributable to:
 
 
 
 
788

 
693

 
Owners of the parent
 
1,297

 
1,643

5

 
1

 
Non-controlling interests
 
4

 
2

 
 
 
 
 
 
 
 
 
 
 
 
 
Net profit from discontinued operations attributable to:
 
 
 
 
3,862

 
55

 
Owners of the parent
 
3,968

 
121

(3
)
 
5

 
Non-controlling interests
 
2

 
9

Net revenues
 
 
 
 
Increase/(Decrease)
 
 
 
 
 
 
 
Increase/(Decrease)
Three months ended June 30
 
2019 vs. 2018
 
 
 
Six months ended June 30
 
2019 vs. 2018
2019
 
2018
 
% Actual
 
% CER
 
(€ million)
 
2019
 
2018
 
% Actual
 
% CER
26,741

 
27,611

 
(3.2
)%
 
(6.5
)%
 
Net revenues
 
51,222

 
53,344

 
(4.0
)%
 
(7.7
)%
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).

8



Cost of revenues
 
 
 
 
Increase/(Decrease)
 
 
 
 
 
 
 
Increase/(Decrease)
Three months ended June 30
 
2019 vs. 2018
 
 
 
Six months ended June 30
 
2019 vs. 2018
2019
 
2018
 
% Actual
 
% CER
 
(€ million)
 
2019
 
2018
 
% Actual
 
% CER
23,089

 
23,841

 
(3.2
)%
 
(6.4
)%
 
Cost of revenues
 
44,270

 
45,844

 
(3.4
)%
 
(7.2
)%
86.3
%
 
86.3
%
 
 
 
Cost of revenues as % of Net revenues
 
86.4
%
 
85.9
%
 
 
The decrease in Cost of revenues during the three and six months ended June 30, 2019 compared to the corresponding period in 2018 was primarily related to (i) volume decreases in North America, EMEA and Maserati, which were partially offset by (ii) increases resulting from foreign currency translation effects, and (iii) mix, product costs and enhancements on recently launched vehicles in North America.
Included within Cost of revenues for the three and six months ended June 30, 2019 were amounts of €(24) million and €146 million, respectively, which represent the accrual of regulatory expenses and the utilization of regulatory credits, primarily in North America and EMEA. The amounts for the three and six months ended June 30, 2019 include a benefit in North America as a result of the CAFE fine rate reduction in the U.S. on MY2019 vehicles sold in prior periods. Included within Cost of revenues for the three and six months ended June 30, 2018 were amounts of €100 million and €182 million, respectively, which represent the accrual of regulatory expenses and the utilization of regulatory credits, primarily in North America.
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. For further detail, 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)
 
 
 
 
 
 
 
Increase/(Decrease)
Three months ended June 30
 
2019 vs. 2018
 
 
 
Six months ended June 30
 
2019 vs. 2018
2019
 
2018
 
% Actual
 
% CER
 
(€ million)
 
2019
 
2018
 
% Actual
 
% CER
1,573

 
1,741

 
(9.6
)%
 
(12.1
)%
 
Selling, general and other costs
 
3,090

 
3,317

 
(6.8
)%
 
(9.6
)%
5.9
%
 
6.3
%
 
 
 
Selling, general and other costs as % of Net revenues
 
6.0
%
 
6.2
%
 
 
Selling, general and other costs includes advertising, personnel and other costs. Advertising costs accounted for 47.7 percent and 45.9 percent of total Selling, general and other costs for the three months ended June 30, 2019 and 2018, respectively, and 47.5 percent and 46.7 percent for the six months ended June 30, 2019 and 2018, respectively.
The decrease in Selling, general and other costs during the three and six months ended June 30, 2019 compared to the corresponding period in 2018 was primarily due to (i) lower advertising expenses in North America, EMEA and LATAM, in addition to cost containment actions, as well as (ii) the non-repeat of the €78 million charge arising on settlement of a portion of a supplemental retirement plan in North America in the three months ended June 30, 2018.

9



Research and development costs
 
 
 
 
Increase/(Decrease)
 
 
 
 
 
 
 
Increase/(Decrease)
Three months ended June 30
 
2019 vs. 2018
 
 
 
Six months ended June 30
 
2019 vs. 2018
2019
 
2018
 
% Actual
 
% CER
 
(€ million)
 
2019
 
2018
 
% Actual
 
% CER
322

 
339

 
(5.0
)%
 
(8.6
)%
 
Research and development expenditures expensed
 
632

 
740

 
(14.6
)%
 
(18.5
)%
349

 
356

 
(2.0
)%
 
(4.5
)%
 
Amortization of capitalized development expenditures
 
696

 
738

 
(5.7
)%
 
(8.1
)%
111

 
66

 
68.2
 %
 
63.6
 %
 
Impairment and write-off of capitalized development expenditures
 
127

 
66

 
92.4
 %
 
86.4
 %
782

 
761

 
2.8
 %
 
(0.4
)%
 
Total Research and development costs
 
1,455

 
1,544

 
(5.8
)%
 
(9.1
)%
Three months ended June 30
 
 
 
Six months ended June 30
2019
 
2018
 
 
 
2019
 
2018
1.2
%
 
1.2
%
 
Research and development expenditures expensed as % of Net revenues
 
1.2
%
 
1.4
%
1.3
%
 
1.3
%
 
Amortization of capitalized development expenditures as % of Net revenues
 
1.4
%
 
1.4
%
0.4
%
 
0.2
%
 
Impairment and write-off of capitalized development expenditures as % of Net revenues
 
0.2
%
 
0.1
%
2.9
%
 
2.8
%
 
Total Research and development cost as % of Net revenues
 
2.8
%
 
2.9
%
Total Research and development costs in the three and six months ended June 30, 2019 as compared to the same periods in 2018 included the impact of higher impairment charges of previously capitalized development expenditures, primarily in North America and Maserati.
Research and development expenditures expensed decreased in the three and six months ended June 30, 2019 as compared to the same periods in 2018 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. Amortization of capitalized development costs decreased in the three and six months ended June 30, 2019 as compared to the same periods in 2018 due to lower amortization expense related to the cycle of the current product range.
Total research and development expenditures during the three and six months ended June 30, 2019 and 2018 were as follows:
Three months ended June 30
 
Increase/(Decrease)
 
 
 
Six months ended June 30
 
Increase/(Decrease)
2019
 
2018
 
2019 vs. 2018
 
(€ million)
 
2019
 
2018
 
2019 vs. 2018
644

 
486

 
32.5
 %
 
Capitalized development expenditures
 
1,249

 
906

 
37.9
 %
322

 
339

 
(5.0
)%
 
Research and development expenditures expensed
 
632

 
740

 
(14.6
)%
966

 
825

 
17.1
 %
 
Total Research and development expenditures
 
1,881

 
1,646

 
14.3
 %
 
 
 
 
 
 
 
 
 
 
 
 


66.7
%
 
58.9
%
 
 
 
Capitalized development expenditures as % of Total Research and development expenditures
 
66.4
%
 
55.0
%
 
 
3.6
%
 
3.0
%
 
 
 
Total Research and development expenditures as % of Net revenues
 
3.7
%
 
3.1
%
 
 
The increase in total Research and development expenditures during the three and six months ended June 30, 2019 compared to the corresponding periods in 2018 reflects the efforts in the continued renewal and enrichment of our product portfolio in line with the Business Plan.

10



Net financial expenses
Three months ended June 30
 
Increase/(Decrease)
 
 
 
Six months ended June 30
 
Increase/(Decrease)
2019
 
2018
 
2019 vs. 2018
 
(€ million)
 
2019
 
2018
 
2019 vs. 2018
260

 
265

 
(1.9
)%
 
Net financial expenses
 
504

 
552

 
(8.7
)%
The decrease in Net financial expenses during the three and six months ended June 30, 2019 compared to the corresponding periods in 2018 was primarily due to the reduction in gross debt, partially offset by the increase in interest on lease liabilities due to the adoption of IFRS 16 - Leases (refer to Note 1, Basis of preparation, within our Semi-Annual Condensed Consolidated Financial Statements included elsewhere in this Semi-Annual Report).
Tax expense
Three months ended June 30
 
Increase/(Decrease)
 
 
 
Six months ended June 30
 
Increase/(Decrease)
2019
 
2018
 
2019 vs. 2018
 
(€ million)
 
2019
 
2018
 
2019 vs. 2018
317

 
377

 
(15.9
)%
 
Tax expense
 
529

 
591

 
(10.5
)%
29
%
 
35
%
 
 
 
Effective tax rate
 
29
%
 
26
%
 


The decrease in the effective tax rate during the three months ended June 30, 2019, compared to the corresponding period in 2018, primarily related to adjustments to deferred tax liabilities.
The increase in the effective tax rate during the six months ended June 30, 2019, compared to the corresponding period in 2018, primarily related to non-recurring U.S. tax benefits and an increase in unrecognized tax losses, partly offset by adjustments to deferred tax liabilities.
Net profit from continuing operations
Three months ended June 30
 
Increase/(Decrease)
 
 
 
Six months ended June 30
 
Increase/(Decrease)
2019
 
2018
 
2019 vs. 2018
 
(€ million)
 
2019
 
2018
 
2019 vs. 2018
793

 
694

 
14.3
%
 
Net profit from continuing operations
 
1,301

 
1,645

 
(20.9
)%
The increase in Net profit from continuing operations during the three months ended June 30, 2019, compared to the corresponding period in 2018 was primarily due to (i) improved operating performance in North America and APAC, and (ii) lower tax and non-recurring expenses, partially offset by (iii) lower operating performance in EMEA and Maserati.
The decrease in Net profit from continuing operations during the six months ended June 30, 2019, compared to the corresponding period in 2018 was primarily due to (i) lower operating performance in EMEA and Maserati, partially offset by (ii) lower financial expenses, and (iii) lower tax expense.
Profit from discontinued operations, net of tax
Three months ended June 30
 
Increase/(Decrease)
 
 
 
Six months ended June 30
 
Increase/(Decrease)
2019
 
2018
 
2019 vs. 2018
 
(€ million)
 
2019
 
2018
 
2019 vs. 2018
3,859

 
60

 
n.m.
 
Profit from discontinued operations, net of tax
 
3,970

 
130

 
n.m.
________________________________________________________________________________________________________________________________________________n.m. = number not meaningful
Magneti Marelli, including the gain on sale of €3,811 million and related tax expense of €2 million, is presented as a discontinued operation in the Semi-Annual Condensed Consolidated Financial Statements for the three and six months ended June 30, 2019 and 2018. For more information, refer to Note 2, Scope of consolidation, within our Semi-Annual Condensed Consolidated Financial Statements included elsewhere in this Semi-Annual Report.

11



Adjusted EBIT
 
 
 
 
Increase/(Decrease)
 
 
 
 
 
 
 
Increase/(Decrease)
Three months ended June 30
 
2019 vs. 2018
 
 
 
Six months ended June 30
 
2019 vs. 2018
2019
 
2018
 
% Actual
 
% CER
 
(€ million)
 
2019
 
2018
 
% Actual
 
% CER
1,527

 
1,534

 
(0.5
)%
 
(5.0
)%
 
Adjusted EBIT
 
2,594

 
3,035

 
(14.5
)%
 
(18.6
)%
5.7
%
 
5.6
%
 
+10 bps

 
 
 
Adjusted EBIT margin (%)
 
5.1
%
 
5.7
%
 
-60 bps

 
 
The following chart presents the change in Adjusted EBIT by segment for the three months ended June 30, 2019 compared to the corresponding period in 2018.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13033722&doc=10
For the three months ended June 30, 2019 and 2018, the Adjusted EBIT related to Magneti Marelli that was excluded from the Group's Adjusted EBIT result was €72 million and €121 million, respectively. Refer to Note 2, Scope of consolidation in our Semi-Annual Condensed Consolidated Financial Statements elsewhere in this Semi-Annual Report for additional information regarding the classification of Magneti Marelli as a discontinued operation.
The following chart presents the change in Adjusted EBIT by segment for the six months ended June 30, 2019 compared to the corresponding period in 2018.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13033722&doc=11

12



For the six months ended June 30, 2019 and 2018, the Adjusted EBIT related to Magneti Marelli that was excluded from the Group's Adjusted EBIT result was €218 million and €231 million, respectively. Refer to Note 2, Scope of consolidation in our Semi-Annual Condensed Consolidated Financial Statements elsewhere in this Semi-Annual 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 Semi-Annual Condensed Consolidated Income Statement, to Adjusted EBIT:
Three months ended June 30
 
 
 
Six months ended June 30
2019
 
2018
 
(€ million)
 
2019
 
2018
793

 
694

 
Net profit from continuing operations
 
1,301

 
1,645

317

 
377

 
Tax expense
 
529

 
591

260

 
265

 
Net financial expenses
 
504

 
552

 
 
 
 
Adjustments:
 
 
 
 
(8
)
 
1

 
Restructuring costs, net of reversals
 
196

 
2

113

 
164

 
Impairment expense and supplier obligations
 
155

 
164


 

 
U.S. special bonus payment
 

 
111


 
78

 
Employee benefits settlement losses
 

 
78


 
(43
)
 
Recovery of costs for recall - airbag inflators
 

 
(43
)

 

 
Recovery of costs for recall - contested with supplier
 

 
(63
)
(7
)
 

 
Gains on disposal of investments
 
(7
)
 


 

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

59

 
(2
)
 
Other
 
80

 
(2
)
157

 
198

 
Total Adjustments
 
260

 
247

1,527

 
1,534

 
Adjusted EBIT
 
2,594

 
3,035

During the three months ended June 30, 2019, Adjusted EBIT excluded adjustments primarily related to:
€113 million of impairment expense, primarily in Maserati and North America; and
€59 million of Other costs, primarily relating to litigation proceedings. Refer to Note 16, Guarantees granted, commitments and contingent liabilities in the Semi-Annual Condensed Consolidation Financial Statements included elsewhere in this report for further details.
During the six months ended June 30, 2019, Adjusted EBIT excluded adjustments primarily related to:
€196 million of restructuring costs, primarily related to LATAM, EMEA and North America, of which €76 million related to the write-down of Property, plant and equipment and €120 million related to the recognition of provisions for restructuring. (Refer to Note 11, Provisions, in the Semi-Annual Condensed Consolidation Financial Statements included elsewhere in this report);
€155 million relating to impairment expense of €87 million in North America, €62 million in Maserati 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 Semi-Annual Condensed Consolidation Financial Statements included elsewhere in this report).

13



During the three months ended June 30, 2018, Adjusted EBIT excluded adjustments primarily related to:
€164 million relating to impairment expense of €109 million, primarily in EMEA and APAC and supplier obligations of €55 million resulting from changes in product plans in connection with the updated business plan;
€78 million charge arising on settlement of a portion of a supplemental retirement plan in North America;
€43 million gain from the recovery of amounts accrued in 2016 in relation to costs for recall campaigns related to Takata airbag inflators;
During the six months ended June 30, 2018, in addition to the items above, 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 June 30
 
Increase/(Decrease)
 
 
 
Six months ended June 30
 
Increase/(Decrease)
2019
 
2018
 
2019 vs. 2018
 
(€ million) 
 
2019
 
2018
 
2019 vs. 2018
928

 
909

 
2.1
%
 
Adjusted net profit
 
1,498

 
1,872

 
(20.0
)%
The following table summarizes the reconciliation of Net profit from continuing operations, which is the most directly comparable measure included in the Semi-Annual Condensed Consolidated Income Statement, to Adjusted net profit:
Three months ended June 30
 
 
 
Six months ended June 30
2019
 
2018
 
(€ million)
 
2019
 
2018
793

 
694

 
Net profit from continuing operations
 
1,301

 
1,645

157

 
198

 
Adjustments (as above)
 
260

 
247

(22
)
 
17

 
Tax impact on adjustments
 
(63
)
 
6


 

 
Impact of U.S. tax reform
 

 
(26
)
135

 
215

 
Total adjustments, net of taxes
 
197

 
227

928

 
909

 
Adjusted net profit
 
1,498


1,872

During the three and six months ended June 30, 2019, Adjusted net profit excluded adjustments related to:
€22 million and €63 million gain reflecting the tax impact on the items excluded from Adjusted EBIT above, respectively.
During the three months ended June 30, 2018, Adjusted net profit excluded adjustments related to:
€17 million charge reflecting the tax impact on the items excluded from Adjusted EBIT above.
During the six months ended June 30, 2018, Adjusted net profit excluded adjustments related to:
€26 million gain relating to the impact of December 2017 U.S. tax reform; and
€6 million charge reflecting the tax impact on the items excluded from Adjusted EBIT above.

14



Adjusted diluted earnings per share
Three months ended June 30
 
Increase/(Decrease)
 
 
 
Six months ended June 30
 
Increase/(Decrease)
2019
 
2018
 
2019 vs. 2018
 
(€ per share) 
 
2019
 
2018
 
2019 vs. 2018
0.59

 
0.58

 
1.7
%
 
Adjusted diluted earnings per share
 
0.96

 
1.19

 
(19.3
)%
The following table summarizes the reconciliation of Diluted earnings per share from continuing operations, which is the most directly comparable measure included in the Semi-Annual Condensed Consolidated Financial Statements, to Adjusted diluted earnings per share:
Three months ended June 30
 
 
 
Six months ended June 30
2019
 
2018
 
(€ per share except otherwise noted)
 
2019
 
2018
0.50

 
0.44

 
Diluted earnings per share from continuing operations
 
0.83

 
1.05

0.09

 
0.14

 
Impact of adjustments above, net of taxes, on Diluted earnings per share from continuing operations
 
0.13

 
0.14

0.59

 
0.58

 
Adjusted diluted earnings per share
 
0.96

 
1.19

1,570,180

 
1,568,497

 
Weighted average number of shares outstanding for Diluted earnings per share from continuing operations (thousand)
 
1,570,303

 
1,567,360


15



Results by Segment
 
 
Net revenues
 
Adjusted EBIT
 
Consolidated Shipments
 
 
Three months ended June 30
(€ million, except shipments which are in thousands of units)
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
North America
 
17,639


17,539

 
1,565


1,397

 
596

 
676

LATAM
 
2,050


2,106

 
110


101

 
148

 
150

APAC
 
762


652

 
(12
)
 
(98
)
 
22

 
20

EMEA
 
5,564


6,330

 
22


188

 
357

 
396

Maserati(1)
 
343


568

 
(119
)

2

 
5

 
8

Other activities
 
782

 
564

 
(42
)
 
(43
)
 

 

Unallocated items & eliminations(2)
 
(399
)
 
(148
)
 
3

 
(13
)
 

 

Total
 
26,741

 
27,611

 
1,527

 
1,534

 
1,128

 
1,250

 
 
Net revenues
 
Adjusted EBIT
 
Consolidated Shipments
 
 
Six months ended June 30
(€ million, except shipments which are in thousands of units)
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
North America
 
33,696

 
33,952

 
2,609

 
2,613

 
1,152

 
1,322

LATAM
 
3,982

 
3,996

 
215

 
175

 
268

 
282

APAC
 
1,354

 
1,271

 
(21
)
 
(88
)
 
39

 
39

EMEA
 
10,634

 
11,970

 
3

 
370

 
659

 
741

Maserati
 
814

 
1,322

 
(108
)
 
88

 
10

 
17

Other activities
 
1,453

 
1,292

 
(92
)
 
(85
)
 

 

Unallocated items & eliminations(2)
 
(711
)
 
(459
)
 
(12
)
 
(38
)
 

 

Total
 
51,222

 
53,344

 
2,594

 
3,035

 
2,128

 
2,401

________________________________________________________________________________________________________________________________________________
(1) Maserati shipments for the three months ended June 30, 2019 reflect the impact of rounding of one thousand units.
(2) 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 and six months ended June 30, 2019 as compared to the three and six months ended June 30, 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.

16



North America
 
 
Increase/(Decrease)
 
 
 
 
 
 
 
Increase/(Decrease)
Three months ended June 30
 
2019 vs. 2018
 
 
 
Six months ended June 30
 
2019 vs. 2018
2019
 
2018
 
% Actual
 
% CER
 
 
 
2019
 
2018
 
% Actual
 
% CER
596

 
676

 
(11.8
)%
 

 
Shipments (thousands of units)
 
1,152

 
1,322

 
(12.9
)%
 

17,639

 
17,539

 
0.6
 %
 
(4.8
)%
 
Net revenues (€ million)
 
33,696

 
33,952

 
(0.8
)%
 
(6.9
)%
1,565

 
1,397

 
12.0
 %
 
5.2
 %
 
Adjusted EBIT (€ million)
 
2,609

 
2,613

 
(0.2
)%
 
(7.0
)%
8.9
%
 
8.0
%
 
+90 bps

 

 
Adjusted EBIT margin (%)
 
7.7
%
 
7.7
%
 
0 bps

 

Three months ended June 30, 2019
The Group's market share(1) in North America of 12.4 percent for the three months ended June 30, 2019 was in line with the same period in 2018. The U.S. market share(1) of 13.1 percent reflected an increase of 10 bps from 13.0 percent in the same period in 2018.
Shipments
The decrease in North America shipments in the three months ended June 30, 2019 compared to the same period in 2018 was primarily due to dealer stock reductions (down approximately 80 thousand units from Q1 2019), partially offset by increased Ram pickup truck volumes and all-new Jeep Gladiator production ramp-up.
Net revenues
North America Net revenues in the three months ended June 30, 2019 were in line with the same period in 2018, with favorable model mix and foreign exchange translation effects, offset by lower volumes and negative net pricing from unfavorable Canadian dollar foreign exchange transaction impacts.
Adjusted EBIT
The following chart reflects the change in North America Adjusted EBIT by operational driver for the three months ended June 30, 2019 compared to the same period in 2018.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13033722&doc=14





_______________________________________________________________________________________________________________________________________________
(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.

17



The increase in North America Adjusted EBIT in the three months ended June 30, 2019 compared to the same period in 2018 was primarily due to:
positive model mix, driven by new Ram and Jeep models;
lower SG&A, mainly from lower advertising costs;
overall favorable foreign exchange effects; and
benefit due to the CAFE fine rate reduction in the U.S. on MY2019 vehicles sold in prior periods.
These were partially offset by:
lower shipments.
Six months ended June 30, 2019
Shipments
The decrease in North America shipments in the six months ended June 30, 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 in the first three months of 2019, lower Chrysler and Dodge volumes, as well as dealer stock reductions, partially offset by increased Ram volumes and all-new Jeep Gladiator production ramp-up.
Net revenues
North America Net revenues in the six months ended June 30, 2019 were slightly down compared to the same period in 2018, with €3.5 billion from lower volumes partially offset by €2.1 billion favorable foreign exchange translation effects and €1.1 billion of favorable mix.
Adjusted EBIT
The following chart reflects the change in North America Adjusted EBIT by operational driver for the six months ended June 30, 2019 compared to the same period in 2018.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13033722&doc=15

18



North America Adjusted EBIT in the six months ended June 30, 2019 was in line compared to the same period in 2018 primarily due to:
lower volumes.
This was offset by
favorable mix;
manufacturing and purchasing efficiencies, as well as benefit due to the CAFE fine rate reduction in the U.S. on MY2019 vehicles sold in prior periods;
lower SG&A expense, primarily from a reduction in advertising costs; and
favorable foreign currency translation effects.


19



LATAM
 
 
 
 
Increase/(Decrease)
 
 
 
 
 
 
 
Increase/(Decrease)
Three months ended June 30
 
2019 vs. 2018
 
 
 
Six months ended June 30
 
2019 vs. 2018
2019
 
2018
 
% Actual
 
% CER
 
 
 
2019
 
2018
 
% Actual
 
% CER
148

 
150

 
(1.3
)%
 

 
Shipments (thousands of units)
 
268

 
282

 
(5.0
)%
 

2,050

 
2,106

 
(2.7
)%
 
0.5
%
 
Net revenues (€ million)
 
3,982

 
3,996

 
(0.4
)%
 
5.2
%
110

 
101

 
8.9
 %
 
20.2
%
 
Adjusted EBIT (€ million)
 
215

 
175

 
22.9
 %
 
40.3
%
5.4
%
 
4.8
%
 
+60 bps

 

 
Adjusted EBIT margin (%)
 
5.4
%
 
4.4
%
 
+100 bps

 

Three months ended June 30, 2019
The Group's market share(1) in LATAM increased 60 bps to 14.0 percent for the three months ended June 30, 2019 from 13.4 percent in the same period in 2018. The Group's market share in Brazil and Argentina for the three months ended June 30, 2019 increased 40 bps to 18.8 percent from 18.4 percent and decreased 140 bps to 12.3 percent from 13.7 percent, respectively, compared to the corresponding period in 2018.
Shipments
LATAM shipments in the three months ended June 30, 2019 were substantially flat compared to the same period in 2018 primarily due to increased volumes in Brazil offset by lower Argentina volumes due to the ongoing market decline.
Net revenues
LATAM Net revenues in the three months ended June 30, 2019 were substantially flat compared to the same period in 2018, primarily due to positive net pricing, including recognition of indirect tax credits, offset by unfavorable model mix 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 June 30, 2019 compared to the same period in 2018.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13033722&doc=12

________________________________________________________________________________________________________________________________________________
(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.

20



The increase in LATAM Adjusted EBIT in the three months ended June 30, 2019 compared to the same period in 2018 was primarily due to:
positive net pricing; and
manufacturing efficiencies.
These were partially offset by:
cost inflation;
lower export tax benefits in Brazil and Argentina, included within Industrial costs; and
negative foreign exchange effects.
Six months ended June 30, 2019
Shipments
The decrease in LATAM shipments in the six months ended June 30, 2019, compared to the same period in 2018 was primarily due to ongoing Argentina market decline, partially offset by increased volumes in Brazil.
Net revenues
The LATAM Net revenues in the six months ended June 30, 2019 were in line compared to the same period in 2018 primarily related to lower volumes and negative foreign exchange effects, offset by positive net pricing.
Adjusted EBIT
The following chart reflects the change in LATAM Adjusted EBIT by operational driver for the six months ended June 30, 2019 compared to the same period in 2018.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13033722&doc=13

21



The increase in LATAM Adjusted EBIT in the six months ended June 30, 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.
This was partially offset by:
decreased volumes;
higher industrial costs, mainly from lower export tax benefits in Brazil and Argentina; and
negative foreign exchange 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.




22



APAC
 
 
 
 
Increase/(Decrease)
 
 
 
 
 
 
 
Increase/(Decrease)
Three months ended June 30
 
2019 vs. 2018
 
 
 
Six months ended June 30
 
2019 vs. 2018
2019
 
2018
 
% Actual
 
% CER
 
 
 
2019
 
2018
 
% Actual
 
% CER
35

 
53

 
(34.0
)%
 

 
Combined shipments (thousands of units)
 
74

 
109

 
(32.1
)%
 

22

 
20

 
10.0
 %
 

 
Consolidated shipments (thousands of units)
 
39

 
39

 
 %
 

762

 
652

 
16.9
 %
 
14.5
%
 
Net revenues (€ million)
 
1,354

 
1,271

 
6.5
 %
 
4.2
%
(12
)
 
(98
)
 
87.8
 %
 
89.9
%
 
Adjusted EBIT (€ million)
 
(21
)
 
(88
)
 
76.1
 %
 
83.6
%
(1.6
)%
 
(15.0
)%
 
n.m.

 

 
Adjusted EBIT margin (%)
 
(1.6
)%
 
(6.9
)%
 
n.m.

 

________________________________________________________________________________________________________________________________________________
n.m. = number not meaningful
We locally produce and distribute the Jeep Cherokee, Renegade, Compass and 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 include 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 June 30, 2019
Shipments
The decrease in combined shipments in the three months ended June 30, 2019 compared to the same period in 2018 was primarily due to continuing lower GAC FCA JV volumes.
The increase in consolidated shipments in the three months ended June 30, 2019 compared to the same period in 2018 was mainly due to increased Jeep Wrangler volumes.
Net revenues
The increase in APAC Net revenues in the three months ended June 30, 2019 compared to the same period in 2018 was primarily due to favorable volumes and model mix, as well as non-repeat of prior year incentives for China import duty changes, partially offset by lower sales of components to the GAC FCA JV.

23



Adjusted EBIT
The following chart reflects the change in APAC Adjusted EBIT by operational driver for the three months ended June 30, 2019 compared to the same period in 2018.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13033722&doc=5
The increase in APAC Adjusted EBIT in the three months ended June 30, 2019 compared to the same period in 2018 was primarily due to:
higher revenues;
favorable model mix; and
lower industrial costs.
These were partially offset by:
lower results from the GAC FCA JV, included within Other.
Six months ended June 30, 2019
Shipments
The decrease in combined shipments in the six months ended June 30, 2019 compared to the same period in 2018 was primarily due to continuing lower GAC FCA JV volumes.
Consolidated shipments in the six months ended June 30, 2019 were in line compared to the same period in 2018 with increased Jeep Wrangler shipments offset by decreased volumes in India and Australia.
Net revenues
The increase in APAC Net revenues in the six months ended June 30, 2019 compared to the same period in 2018 was primarily due to favorable model mix, positive net pricing, mainly due to reduced incentives, and foreign exchange effects.

24



Adjusted EBIT
The following chart reflects the change in APAC Adjusted EBIT by operational driver for the six months ended June 30, 2019 compared to the same period in 2018.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13033722&doc=6
The increase in APAC Adjusted EBIT in the six months ended June 30, 2019 compared to the same period in 2018 was primarily due to:
favorable model mix;
positive net price from reduced incentives; and
lower industrial costs.
These were partially offset by:
lower results from the GAC FCA JV.


25



EMEA
 
 
 
 
Increase/(Decrease)
 
 
 
 
 
 
 
Increase/(Decrease)
Three months ended June 30
 
2019 vs. 2018
 
 
 
Six months ended June 30
 
2019 vs. 2018
2019
 
2018
 
% Actual
 
% CER
 
 
 
2019
 
2018
 
% Actual
 
% CER
373

 
414

 
(9.9
)%
 

 
Combined shipments (thousands of units)
 
690

 
775

 
(11.0
)%
 

357

 
396

 
(9.8
)%
 

 
Consolidated shipments (thousands of units)
 
659

 
741

 
(11.1
)%
 

5,564

 
6,330

 
(12.1
)%
 
(12.5
)%
 
Net revenues (€ million)
 
10,634

 
11,970

 
(11.2
)%
 
(11.5
)%
22

 
188

 
(88.3
)%
 
(84.3
)%
 
Adjusted EBIT (€ million)
 
3

 
370

 
(99.2
)%
 
(95.4
)%
0.4
%
 
3.0
%
 
-260 bps

 

 
Adjusted EBIT margin (%)
 
%
 
3.1
%
 
-310 bps

 

Three months ended June 30, 2019
The Group's market share(1) in the European Union for the three months ended June 30, 2019, decreased 60 bps to 7.0 percent from 7.6 percent in the same period in 2018.
Shipments
The decrease in EMEA combined and consolidated shipments in the three months ended June 30, 2019 compared to the same period in 2018, was primarily due to discontinuation of Alfa Romeo Mito and Fiat Punto and planned actions to improve sales channel mix.
Net revenues
The decrease in EMEA Net revenues in the three months ended June 30, 2019 compared to the same period in 2018, was primarily due to lower volumes.
Adjusted EBIT
The following chart reflects the change in EMEA Adjusted EBIT by operational driver for the three months ended June 30, 2019 compared to the same period in 2018.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13033722&doc=7


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

26



The decrease in EMEA Adjusted EBIT in the three months ended June 30, 2019 compared to the same period in 2018 was primarily due to:
lower volumes;
increased compliance and product costs; and
negative foreign exchange effects.
These were partially offset by:
reduced advertising costs; and
labor efficiencies from restructuring actions.
Six months ended June 30, 2019
Shipments
The decrease in EMEA combined and consolidated shipments in the six months ended June 30, 2019 compared to the same period in 2018, was primarily due to planned optimization of sales channel mix, market conditions and discontinuation of Alfa Romeo Mito and Fiat Punto.
Net revenues
The decrease in EMEA Net revenues in the six months ended June 30, 2019 compared to the same period in 2018, was primarily due to lower volumes.
Adjusted EBIT
The following chart reflects the change in EMEA Adjusted EBIT by operational driver for the six months ended June 30, 2019 compared to the same period in 2018.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13033722&doc=8

27



The decrease in EMEA Adjusted EBIT in the six months ended June 30, 2019 compared to the same period in 2018 was primarily due to:
lower volumes;
negative net pricing;
increased compliance and product costs; and
negative foreign exchange transaction impacts.
These were partially offset by:
reduced advertising costs;
warranty and inventory cost adjustments; and
labor efficiencies from restructuring actions.

28



Maserati
 
 
 
 
Increase/(Decrease)
 
 
 
 
 
 
 
Increase/(Decrease)
Three months ended June 30
 
2019 vs. 2018
 
 
 
Six months ended June 30
 
2019 vs. 2018
2019
 
2018
 
% Actual
 
% CER
 
 
 
2019
 
2018
 
% Actual
 
% CER
4.2

 
7.8

 
(46.2
)%
 

 
Shipments (thousands of units)
 
9.7

 
17.2

 
(43.6
)%
 

343

 
568

 
(39.6
)%
 
(40.2
)%
 
Net revenues (€ million)
 
814

 
1,322

 
(38.4
)%
 
(39.7
)%
(119
)
 
2

 
n.m.

 
n.m.

 
Adjusted EBIT (€ million)
 
(108
)
 
88

 
n.m.

 
n.m.

(34.7
)%
 
0.4
%
 
n.m.

 

 
Adjusted EBIT margin (%)
 
(13.3
)%
 
6.7
%
 
n.m.

 

________________________________________________________________________________________________________________________________________________
n.m. = number not meaningful
Three months ended June 30, 2019
Shipments
The decrease in Maserati shipments in the three months ended June 30, 2019 compared to the same period in 2018 was mainly due to dealer stock reductions and lower sales.
Net revenues
The decrease in Maserati Net revenues in the three months ended June 30, 2019 compared to the same period in 2018 was primarily due to lower volumes and higher incentives related to accelerated transition to China 6 emissions standards.
Adjusted EBIT
The decrease in Maserati Adjusted EBIT in the three months ended June 30, 2019 compared to the same period in 2018 was primarily due to lower revenues and adjustments of residual values in the U.S.
Six months ended June 30, 2019
Shipments
The decrease in Maserati shipments in the six months ended June 30, 2019 compared to the same period in 2018 was mainly due to planned inventory management actions and dealer stock reductions.
Net revenues
The decrease in Maserati Net revenues in the six months ended June 30, 2019 compared to the same period in 2018 was primarily due to lower volumes.
Adjusted EBIT
The decrease in Maserati Adjusted EBIT in the six months ended June 30, 2019 compared to the same period in 2018 was primarily due to lower revenues and adjustments of residual values in the U.S.


29



Liquidity and Capital Resources
Available Liquidity
The following table summarizes our total available liquidity:
(€ million)
At June 30, 2019
 
At December 31, 2018
Cash, cash equivalents and current debt securities(1)
15,774

 
12,669

Undrawn committed credit lines(2)
7,725

 
7,728

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

 
728

Available liquidity(3)
23,499

 
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 June 30, 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 June 30, 2019 increased €2.4 billion from December 31, 2018 primarily as a result of the proceeds from the sale of Magneti Marelli of €5.8 billion, net of €0.4 billion cash held by Magneti Marelli at the time of the disposal, partially offset by €3.1 billion dividend payments.
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 June 30, 2019, €9.3 billion, or 58.9 percent, were denominated in U.S. Dollar (€7.8 billion, or 58.2 percent, at December 31, 2018) and €2.8 billion, or 17.7 percent, were denominated in Euro (€1.9 billion, or 14.2 percent, at December 31, 2018).
At June 30, 2019, 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. At 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.

30



Cash Flows
The following table summarizes the cash flows from operating, investing and financing activities for the six months ended June 30, 2019 and 2018. Refer to our Semi-Annual Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2019 and 2018 included elsewhere in this Semi-Annual Report for additional detail.