European OEMs: Germans set sights on new sales record

H1 2013 results and 2013 full year outlooks reflect varying levels of success

2013/09/06

Summary

 This is a report on six major European OEM groups' business results in the first half of 2013, outlooks, targets and strategies as well as their major developments. Forecasts by LMC Automotive Ltd. on light vehicle production in Germany are also provided.

Outline: Six European OEMs results in H1 2013

Comparison of H1 sales of the 6 European OEM

 In H1 2013, the six European OEM groups of PSA, Renault, Fiat, VW, BMW and Daimler sold a total of 11,795,000 units, up 1.7% y/y. The three German OEMs of VW, BMW, Daimler, and Fiat exceeded their respective global sales in the same period a year earlier. Fiat expanded unit sales by 2.4% y/y, since favorable sales outside the EU balanced out doldrums in Europe. Renault dropped unit sales by 1.9% y/y due to stagnation in Europe and North & South America. Unit sales for PSA declined by 9.8% y/y affected by poor performances in Europe and Russia as well as the halted Completely Knocked Down (CKD) exports to Iran.


 As for the financial results, Daimler greatly increased both EBIT and net profit by 41.1% and 72.1% y/y respectively as a gain from EADS stake sale is included. On the other hand, Renault suffered a marked decline of 87.5% y/y in net income to EUR 97 million. PSA reported a sales decrease of 3.8% y/y, and its net loss was EUR 426 million, 47.9% less than H1 2012.


 Each OEM plans various strategies in order to improve production operations and cover poor sales in the European market, which shows no sign of recovery. They will enhance sales and production network to increase the ratio of sales outside the European market. Simultaneously, production network will be restructured and factory utilization rate will be improved to boost the production capacity in Europe.


 Regarding the outlooks, the three German OEMs respectively plan to achieve the highest unit sales in history in the 2013 full year. Renault keeps its original targets to exceed the 2012 unit sales and to turn its automotive business around toward profitability. Fiat also holds its original targets for the Group: up to EUR 92 billion in net revenue, EUR 4.5 billion in operating profit and EUR 1.5 billion in profit. Lastly, PSA aims to halve the EUR 3 billion deficits in operating cash flow of 2012.


Related Reports:
* VW boosts production in key markets in North America and China (Aug. 2013)
* PSA looks to break its dependence on Europe by expanding into emerging markets (Jul. 2013)
* FIAT lays out strategy to break-even in Europe by 2016 (Jun. 2013)
* Renault strives for positive operating margin for the automotive division (May 2013)
* Mercedes-Benz plans to sell 1.6 million units in 2015 (Feb. 2013)
* BMW to reach sales of two million vehicles: four years ahead of plan (Dec. 2012)


 

Outlooks of the Six European OEMs

PSA * PSA aims at least to halve the EUR 3 billion deficits in operating cash flow of 2012. It plans to greatly reduce it in 2014 to balance it out in 2015.
Renault * Renault will keep its original targets for 2013: increasing unit sales, turning operating profit and free cash flow positive in the automobile business and achieving a cumulative EUR 2 billion free cash flow in the period from 2011 through 2013. The free cash flow was EUR 1,084 million in 2011 and EUR 597 million in 2012.
Fiat * The Fiat-Chrysler Group will keep its original targets: EUR 88 billion to 92 billion in net revenue, EUR 4 to 4.5 billion in operating profit and EUR 1.2 to 1.5 billion in profit.
VW * VW expects that unit sales and sales revenue in 2013 will exceed the previous year results. It aims to achieve the operating profit equivalent to the 2012 result although negatively affected by fiercer competition.
BMW * BMW anticipates a single digit year-over-year growth in passenger car sales and about the same operating profit as 2012. The automotive division aims to achieve EBIT/revenue ratio of 8-10% and expects Return on Capital Employed (RoCE) of 26%.
Daimler * Daimler expects a y/y increase in passenger car sales, rewriting its unit sales record. It predicts lower EBIT than in 2012.

Business results of the Six European OEMs

(Euros in millions / Global sales units in thousands)
2008 2009 2010 2011 2012 YoY
2011-2012
Jan.-Jun.
2012 2013 YoY
PSA Global Sales Volume 3,260 3,188 3,602 3,549 2,965 (16.5%) 1,619 1,460 (9.8%)
Sales 54,356 48,417 56,061 59,912 55,446 (7.5%) 28,809 27,710 (3.8%)
Operating Profit 550 (689) 1,796 1,315 (576) - (51) (65) 27.5%
Net Profit (363) (1,161) 1,134 588 (5,010) - (818) (426) (47.9%)
Renault Global Sales Volume 2,382 2,309 2,627 2,723 2,550 (6.4%) 1,328 1,303 (1.9%)
Sales 37,791 33,712 38,971 42,628 41,270 (3.2%) 20,622 20,441 (0.9%)
Operating Profit 326 (396) 1,099 1,091 729 (33.2%) 508 583 14.8%
Net Profit 599 (3,068) 3,490 2,139 1,735 (18.9%) 774 97 (87.5%)
Fiat Global Sales Volume 2,153 2,152 2,082 3,966 4,209 6.1% 2,121 2,172 2.4%
Sales - 32,684 35,880 59,559 83,957 41.0% 41,745 42,082 0.8%
Operating Profit - 736 1,112 2,392 3,814 59.4% 1,753 1,647 (6.0%)
Net Profit - (345) 222 1,651 1,411 (14.5%) 816 715 (12.4%)
VW Global Sales Volume 6,257 6,336 7,203 8,265 9,276 12.2% 4,552 4,798 5.4%
Sales 113,808 105,187 126,875 159,337 192,676 20.9% 95,378 98,687 3.5%
Operating Profit 6,333 1,855 7,141 11,271 11,510 2.1% 6,540 5,780 (11.6%)
Net Profit 4,688 911 7,226 15,799 21,884 38.5% 8,847 4,793 (45.8%)
BMW Global Sales Volume 1,436 1,286 1,461 1,669 1,845 10.5% 901 955 6.0%
Sales 53,197 50,681 60,477 68,821 76,848 11.7% 37,495 37,098 (1.1%)
Operating Profit 921 289 5,111 8,018 8,300 3.5% 4,401 4,107 (6.7%)
Net Profit 330 210 3,224 4,907 5,122 4.4% 2,629 2,704 2.9%
Daimler Global Sales Volume 2,073 1,551 1,895 2,111 2,198 4.1% 1,072 1,107 3.3%
Sales 98,469 78,924 97,761 106,540 114,297 7.3% 55,895 55,794 (0.2%)
Operating Profit 2,730 (1,513) 7,274 8,755 8,615 (1.6%) 4,366 6,159 41.1%
Net Profit 1,414 (2,644) 4,674 6,029 6,495 7.7% 2,990 5,147 72.1%
Total Global Sales Volume 17,561 16,822 18,871 22,283 23,043 3.4% 11,593 11,795 1.7%
Sales - 349,605 416,025 496,797 564,494 13.6% 279,944 281,812 0.7%
Operating Profit - 282 23,533 32,842 32,392 (1.4%) 17,517 18,211 4.0%
Net Profit - (6,097) 19,970 31,113 31,637 1.7% 15,238 13,030 (14.5%)

Sources: The OEMs' press releases and financial statements.
Note: Numbers in brackets "(  )" represent negative value.