European OEMs' 2012 outlooks: German Three and Renault aim for record sales
PSA posts net loss in H1 of 2012, preparing restructure and cost reduction plan
Six European OEMs of PSA, Renault, Fiat, VW and BMW and Daimler sold 11.593 million units in the first half of 2012, up by 3.1% y/y. Despite the slumping European markets, soaring demands in North America, China and Russia and brisk sales of premium cars underpinned their global sales. Especially, the German three of VW, BMW and Daimler achieved the best sales records for the first six month of the fiscal year, respectively. On the contrary, Renault and PSA saw a drop in sales volume in the first half of 2012, because of shrinking European compact car markets. Fiat set off the drop in sales in Europe against an increase in sales in North America by its consolidated company Chrysler.
In financial aspects, three German OEMs posted record revenue, while BMW and Daimler of the three posted a fall in EBIT due to rising development costs. Fiat enjoyed a drastic increase in sales and EBIT thanks to the effects of the consolidation of Chrysler, while it posted a net loss in the non-consolidated results. Renault and PSA saw a fall in sales volume. As a result, Renault saw a decrease in sales and profit, while PSA saw a net loss and announced the restructuring and cost reduction programs.
Each of these companies projects that the 2012 global market will continue to expand centering on emerging countries and North America, although European markets will shrink further than the initial forecasts. Three German OEMs continue to aim to refresh the record results of 2011 based on strong performance in the first half. Despite the fall of sales over the first six months, Renault will keep the initial full-year sales target unchanged, which exceeds the record sales of 2011.
Fiat (May 2012), Renault (Jan. 2012), BMW (Nov. 2011)
Mercedes-Benz Cars (Nov. 2011), Daimler's Commercial Vehicle Business (Nov. 2011)
Six European OEMs' 2012 Business Forecasts
|PSA||PSA outlooks European markets will stay grim, and shrink by 8% (it was a 5% fall according to the forecast announced in February 2012). By implementing financial improvements such as selling assets in 2012, PSA will constrain the net debt scale to the level at the end of 2012 (2.4 billion Euros).|
|Renault||In the first half of 2012, sales volume was down by 3.3% y/y, and the free cash flow fell to negative 200 million Euros. However, it keeps the initial targets at sales volume exceeding the 2011 level, and positive free cash flow.|
|Fiat|| Fiat revised the initial sales forecast of 12.90 million - 13.40 million units to 12.70 million units for the European market, while altering the one upward to 14 million units for the US market where the Chrysler has been reporting strong sales.
Fiat maintains the initial 2012 targets of the entire Fiat-Chrysler Group at sales of more than 77 billion Euros, a trading profit of 3.8 billion to 4.5 billion Euros and a net profit of 1.2 billion to 1.5 billion Euros.
|VW||VW sees that global passenger car and light commercial vehicle markets will continue to increase in the second half of 2012, although the growth rate will decelerate from that of the first half, which was 7.5% up y/y. VW expects that sales volume and sales will exceed the 2011 record levels, while aiming for a trading profit unchanged from the previous year.|
|BMW||BMW aims for a second consecutive record sales volume in 2012, and also targets to have an EBIT surpassing the 2011 record level.|
|Daimler||Daimler expects the worldwide market will be up by about 4% in 2012, centering on the US and Asia. It plans to bring the Group's sales volume and sales higher than 2011 levels. It set the EBIT target unchanged from 2011.|
Six European OEMs' business results
|(Euros in millions and global sales units in thousands)|
|PSA||Global sales volume||3,428||3,260||3,188||3,602||3,549||1,860||1,619|
|Renault||Global sales volume||2,485||2,382||2,309||2,627||2,722||1,374||1,328|
|Fiat||Global sales volume||2,234||2,153||2,152||2,082||4,000||2,063||2,121|
|VW||Global sales volume||6,190||6,257||6,336||7,203||8,265||4,128||4,552|
|BMW||Global sales volume||1,501||1,436||1,286||1,461||1,669||833||901|
|Daimler||Global sales volume||2,089||2,073||1,551||1,895||2,111||989||1,072|
|Total||Global sales volume||17,926||17,561||16,822||18,871||22,316||11,249||11,593|
|Note: 1.||Global sales volume of Fiat represents those of Fiat Group Automobiles, which do not include that of Chrysler LLC by 2010. After 2011, it includes whole Fiat's and Chrysler's unit sales. Revenue and operating/net profit include those of Chrysler after June 2011. Fiat split off the commercial vehicles/industrial equipment division (Fiat Industrial) in January 2011. The 2009 and 2010 data represent the sales of the passenger car division announced retroactively.|
|2.||VW's global sales include those of Scania which has been consolidated since July 2008, and those of MAN from November 2011.|
With fall of sales by 13% to 1.62 million units and net loss, PSA announces restructure and cost reduction programs
PSA's global sales in the January-June period of 2012 were down by 13% y/y to 1.619 million units. The debt crisis in Europe dampened its sales there to 980K units, down by 15.1% over the previous year. Moreover, PSA recorded a drastic sales drop by 20.8% to 122K units in a reversal from the 2011 brisk sales in Latin America. On the contrary, sales increased by 17.1% to 41K units in Russia and 7.2% to 209K units in China. Total sales outside Europe accounted for 39.5% of the total, down by about 2 percentage points from 42% throughout 2011 (PSA's management objective is set at 50% by 2015).
The Group's sales revenues were down by 5.1% y/y to 29.55 billion Euros through H1 2012. Automotive Division's revenues were down by 10.5% y/y to 20.2 billion Euros. The Group's recurring operating income was in the black at about four million Euros, and thereby, PSA Group avoided a deficit with a slim margin from the breakeven point. Automotive division posted recurring operating loss of 660 million Euros.
In July 2012, PSA unveiled Rebound 2015, a plan to make a turnaround in response to poor business performance. It aims to bring operational free cash flow back to a breakeven by the end of 2014 from negative 1.6 billion Euros in 2011. For this purpose, it plans to generate about 600 million Euros from the reorganization measures based on closing the Aulnay Plant in France, about 550 million Euros by reducing capital expenditures, and about 350 million Euros by a production cost cut based on joint procurement with GM.
PSA's global sales by region
|(Units in thousands)|
PSA's global sales by region
|(Euros in millions)|
|(of which automotive division)||45,519||41,643||38,265||41,405||42,710||22,585||20,203|
|Recurring operating income||1,752||550||(689)||1,796||1,315||1,157||4|
|(of which automotive division)||858||(225)||(1,257)||621||(92)||405||(662)|
|Note: 1.||Recurring operating income is a business index which PSA has used since 2007. It is calculated by subtracting non-recurring operating income and expenses from operating margin.|
|2.||PSA has distribution company Gefco, parts supplier Faurecia, and Financial Division other than Automotive Division.|
Rebound 2015: Plan for earnings recovery by 2014
|Goal||To bring the business free cash flow of the Group to the breakeven point by the end of 2014. For this purpose, PSA will take cost reduction measures worth not less than 1.5 billion Euros. It had a negative business free cash flow of 1.65 billion Euros in 2011.|
|Underlying assumptions||* European market and prices environments will get stabilized at the 2012 levels * PSA will hold a 13% market share in Europe.|
|Restructuring||About 600 million Euros||8000 job cuts in France: PSA will close the Aulnay Plant, and lay off 3000 employees. It will also terminate 1400 employees of the Rennes Plant, and 3600 employees of other non-direct divisions across the company (of which PSA plan to relocate 1900 employees within the company, and have the others leave their employment voluntarily or outplace them).|
|Capital expenditure||About 550 million Euros||PSA budgets an equivalent sum of money to 2011 for 2012 capital investment and R&D costs, i.e., 3.7 billion Euros. It plans to reduce these expenses after 2013.|
|Production costs||About 350 million Euros||* PSA will aim for synergy from joint purchase with GM by exploiting a purchase scale of a total of 100 billion Euros per year to cut costs worth about 150 million Euros. * It will also cut about 200 million Euros based on the platform-modular strategy and by cutting development costs.|
|Product strategy||2013||PSA will launch eight models including new models of the Peugeot 208 GTI and the new Citroen DS line model.|
|2014||The launch of four models is planned.|
|Alliance with GM||Logistics||Gefco, a PSA's affiliate, will undertake logistics for GM in Europe and Russia.|
|Joint procurement venture||This is under investigation by the antitrust authorization. The venture will start activities in the fourth quarter of 2012.|
|Joint projects||The joint projects will be decided in the latter half of 2012.|
Renault aims to refresh the record unit sales throughout the year, despite fall in sales volume in the H1 2012 by 3.3%
Renault Group's global sales volume slowed down in the January - June period of 2012 from the second consecutive record high in 2011. It was 1.328 million units, down by 3.3% y/y. By brand, Dacia sold 181K units, up by 25% from the year earlier, and Renault sold 1.114 million units, down by 2.4% y/y. The Renault-Samsung brand is slumping due to intensifying competitions in the Korean market. Its sales plummeted by 41.2% from the period a year earlier, and resulted in 33K units. By region, sales in Europe were down by 14.9% from a year earlier to 708K units, due to economic stagnation. On the contrary, sales outside Europe expanded. Noteworthy were strong sales in Eurasia and the Americas, which were up by 29.4% and 20.4%, respectively to 104K units and 215K units.
Earnings in the first half of 2012 were 20.94 billion Euros, down by 0.8% y/y. Despite the fall in sales volume by 3.3%, Renault suppressed the range of the fall thanks to an improvement of the product mix and strong business of the financial department. Compared with the year-earlier-period, trading profit was down by 23.5% to 480 million Euros, and net profit down by 37.3% to 790 million Euros. Automobile division posted a negative free cash flow of 200 million Euros.
The business results in the first half of 2012 were unfavorable; however, the full-year business targets will be unchanged, i.e., more sales volume than the record high in 2011, and positive free cash flow of the automotive division.
Renault's global sales volume by brand and region
|(Units in thousands)|
Note: Europe includes Western and Central Europe. Euromed includes Eastern Europe (Romania, Bulgaria, etc.), Turkey and North Africa. Eurasia includes Russia and CIS countries. Asia-Africa includes Oceania and Middle East.
Renault's consolidated business results
|(Euros in millions)|
|Note: 1.||The 2010 net profit includes the gain of 2 billion Euros on sale of securities of truck manufacturer Volvo AB.|
|2.||Net Profit includes the contribution from Renault's share in associated companies including Nissan (for example, it was 1,289 million Euros in 2010, 1,524 million Euros in 2011(H1: 557 million Euros) and 630 million Euros in the H1 2012).|
Renault aims to refresh the sales record throughout 2012 despite unfavorable business performance in the January - June period
|2012 global market forecast||Renault revised upward the forecast of the growth rate of the global passenger car and light commercial vehicle markets (See note) from 4% to 5%. It altered the forecast of the European market volume downward by 3 percentage points, seeing the market shrinkage by 6 to 7%.|
|2012 targets||Initial targets will be unchanged * Renault aims to make Automobile Divisions' positive free cash flow (it was negative 200 million Euros in the first half). * It aims to refresh the 2011 record sales of 2.722 million units on the premises that the European market will not go worse than the present moment.|
|Note: 1.||According to the Renault's tabulation, the 2011 global markets of passenger cars and light commercial vehicles will grow by 5.3% over the previous year to 74.79 million units.|
|2.||Renault's medium term targets by 2013 are a sales volume of three million units, a free cash flow of two billion Euros, and an operating profit margin of 5%|
Fiat aims to sell 4.1 to 4.4 million units per year with Chrysler to make up for slumping Fiat
Fiat-Chrysler posted a sales volume of 2.121 million units in the first half of 2012, up by 2.8% y/y. The sales volume in Europe was down by 15.8% from the period of a year earlier to 561K units. On the contrary, it was up by 17.6% to 1.068 million units in North America which is Chrysler's main market.
With consolidated results, in the comparison on a year-over-year basis, revenues were up by 86.7% to 41.75 billion Euros, trading profit up by 2.4-fold to 1.88 billion Euros, and net profit down by 42.4% to 740 million Euros because an unusual income of 1.09 billion Euros were posted last year. Excluding Chrysler, the non-consolidated financial figures of Fiat showed a 6.6% fall in sales revenue from the year-earlier to 17.93 billion Euros, and a net loss of 520 million Euros. Chrysler had strong business in North America and underpinned the Group's business results for slumping Fiat.
As for the business throughout 2012, Fiat-Chrysler reported that the entire group got back on track to achieve initial targets at a sales volume of 4.1 million to 4.4 million units, revenues over 77 billion Euros, a trading profit of 3.8 billion to 4.5 billion Euros and a net profit of 1.2 billion to 1.5 billion Euros.
Fiat-Chrysler's global sales by region
|(Units in thousands)|
Note: Chrysler's unit sales are included in the data from 2011
Fiat-Chrysler's consolidated business results
|(Euros in millions)|
|(excl. Chrysler)||(incl. Chrysler)||(excl. Chrysler)||(incl. Chrysler)|
|Profit/loss for the year||(345)||222||1,006||1,651||1,200~1,500||1,417||(519)||1,274||737|
|Note: 1.||Chrysler's business results are included in the data from June 2011.|
|2.||Profit for the year (including Chrysler) in full 2011 and the first half of the year included unusual income of about one billion Euros.|
Fiat sets 2012 targets at a sales volume over 4.1 million units and a trading profit of 3.8 billion to 4.5 billion Euros
|Market Forecast||* Fiat projected that the annual sales volume will reach 12.7 million units (vs. 12.9 million to 13.4 million units in the initial forecast) in the European passenger car market, and the light passenger car market will shrink about 10% to 1.6 million units (vs. 1.8 million units in the initial forecast). It also expects that the passenger car sales in its home market of Italy will go worse than the initial forecast of 1.65 million to 1.7 million units per year and fall to 1.4 million units. * The US market will expand to 14 million units (vs. 13.8 million units in the initial forecast). * The Brazilian market will grow 5% from 3.4 million units in 2011.|
|2012 targets||Fiat keeps the initial targets: The entire Fiat-Chrysler group aims to post a sales volume of 4.1 million to 4.4 million units, earnings of more than 77 billion Euros, a trading profit of 3.8 billion to 4.5 billion Euros, and a net profit of 1.2 billion to 1.5 billion Euros.|
VW sells a record of 4.55 million units in the H1, aiming to refresh the records of sales units and revenues throughout 2012
In the first half of 2012, VW refreshed the record sales volume by selling 4.552 million units, up by 10.3% y/y. In Western Europe where the automotive market is shrinking, its sales volume was slightly down by 0.9% y/y to 1.647 million units. In China, the company continued to have strong sales, and recorded 1.302 million units, up by 17.5% y/y. By brand, Audi and VW brands were sold in 733K units and 2.787 million units, up by 12.3% and 10.2%, respectively. In contrast, SEAT brand's sales volume was down by 12.4% to 163K units, because its main market, Spain, suffers economic stagnation due to its sovereign debt crisis.
VW marked a record increase in sales revenue of 22.6% from last year, posting 95.38 billion Euros due to the consolidation with MAN. Its operating profit was 6.49 billion Euros, up by 6.7%. VW posted a higher level of operating profit than the full 2008 operating profit of 6.33 billion Euros.
VW sees that the global passenger car market growth rate will slow down from 7.5% in the first half of 2011. It expects that the sales volume and revenue will exceed the 2011 levels throughout 2012. It will continue to set an operating profit target at a similar level to that of 2011, 11.3 billion Euros.
VW's global sales by brand and region
|(Units in thousands)|
|Note: 1.||"Other brands" are Bentley, Lamborghini and Bugatti. "Commercial vehicles" are all VW brand and do not include Scania and MAN.|
|2.||VW has consolidated MAN since November 9, 2011.|
VW Group' consolidated business results
|(Euros in millions)|
|Profit before tax||6,543||6,608||1,261||8,994||18,926||8,233||10,056|
|Profit after tax||4,122||4,688||911||7,226||15,799||6,496||8,827|
|Note: 1.||Revenue and Profit include the data of the Financial Service Division.|
|2.||The Profit before tax includes a nonrecurring profit from the re-measurement of put and call option values in the amount of 1.8 billion Euros in 2010 , 6.6 billion Euros in 2011, 0.5 billion Euros in the H1 2011, and 2.6 billion Euros in the H1 2012.|
VW to aim for more sales volume and revenue in 2012 than 2011
|Market forecast||VW expects that the global passenger and light commercial vehicle markets will grow in the latter half of 2012, although the growth rate will slow down from the H1 of 2012 of 7.5%.|
|2012 Plan||VW will hold the initial targets: 2012 sales volume and sales revenue are expected to exceed the 2011 levels with the launch of various new models including the new Golf. The operating profit is expected to maintain 2011's level of 11.3 billion Euros.|
|Consolidation of Porches||VW bought out a 50.1% stake in the automotive business company Porsche A.G. for worth 4.46 billion Euros and one VW share, and wholly owned Porsche. The contribution to the 2012 profit level by Porsche and MAN, of which ownership VW acquired last November, is expected to be offset by initial depreciation and amortization expense from purchase price allocation.|
BMW posts record sales volume and revenue in the H1 2012, aiming to refresh both records in full fiscal year
BMW posted a record sales volume of 901K units in the first half of 2012, up by 8.1% y/y. Its sales volume in its home market Germany was down by 1.5% to 142K units, while it was up by 30.6% from a year-earlier level to 159K units in China, which outpaced the German market. Underpinned by strong sales of the 1 Series and 3 Series, the BMW brand sold 747K units, up by 8.3% y/y. MINI brand recorded a sales volume of 152K units, up by 7%.
In addition, BMW marked record revenue for the first half period. It was 37.4 billion Euros, up by 10.5% from last year. On the other hand, pre-tax profit was down by 6.9% to 4.05 billion Euros due to the increase in personnel expenses and development costs.
BMW will continue to aim for record unit sales throughout 2012, and expect the full-year income will exceed the 2011 level as well.
BMW's global sales by brand and region
|Rest of Europe||443,600||432,200||357,300||369,300||405,700|
BMW's consolidated results
|(Euros in millions)|
|Production volume (unit)||1,541,503||1,439,918||1,258,417||1,461,253||1,738,160||880,006||912,653|
|Note: 1.||The 2007 pretax profit includes a temporary financial profit of 97 million Euros.|
|2.||"EBIT" stands for Earnings Before Interest and Taxes.|
BMW aims to refresh the record in 2012 as well
|2012 forecast||BMW will hold the initial targets: BMW will aim to refresh the sales volume record as an entire group following 2011. In addition, it will plan to update the pre-tax record in 2011. It will have an EBIT margin of the automotive segment at 8% to 10% (it was 11.8% in 2011).|
|Joint development with Toyota||BMW and Toyota, in June 2012, signed four memoranda with respect to joint development of the fuel cell system, joint development of sport cars, cooperation for powertrain electrification, and joint research and development of weight saving technologies. BMW will grant Toyota its technologies regarding sports cars and of carbon-fiber-reinforced polymer, which is used for the i-brand. Toyota will provide BMW the fuel cell and the hybrid technologies. Previously both companies had agreed to supplying diesel engines from BMW to Toyota in December 2011 and joint development of the next generation Li-ion batteries in March 2012.|
Daimler sells 1.07 million units, up by 8% in the H1 2012, while aiming for record sales volume and revenue throughout 2012
Daimler's passenger car division Mercedes-Benz Cars had record sales in the first-half period of 2012, up by 6% y/y to 709K units. Sales of the C-Class and SUV models continued to be strong. By region, sales volume was up by 3% to 326K units in Western Europe, where the economy is slumped. In China, the company sold 102K units, slightly up by 0.8%. Daimler's total sales volume including commercial vehicles was up by 8.4% to 1.072 million units.
Sales in the first half of 2012 were up by 9.5% from last year to 55.9 billion Euros, while EBIT was down by 5.2% from the previous year's level to 4.37 billion Euros. Expenses for technical development and production of new models are mainly responsible for the decrease.
Daimler sees that the 2012 global passenger car market will grow by about 4%, centering on the US and Asia. In 2012, it aims to refresh the 2011 record-setting sales volume and revenue, and have an EBIT comparable to the 2011 level.
Mercedes-Benz Cars' sales by region (on a wholesale basis)
|(other Western European countries)||436,297||400,761||325,733||342,903||334,510||177,574||180,042|
Note: The figures above include Mitsubishi brand vehicles manufactured and sold in South Africa by Mercedes-Benz Cars. (2007: 10,100; 2008: 8,190; 2009: 5,274; 2010: 4,192; 2011: 2,663 (H1: 2,391), H1 2012: 40).
Daimler's consolidated results
|(Euros in millions)|
|Production volume (Units in thousands)||2,097||2,150||1,456||1,941||2,137||1,029||1,100|
|Sales volume (Units in thousands)||Passenger cars||1,293||1,273||1,094||1,277||1,381||668||709|
|Note: 1.||Data of passenger cars are from Mercedes-Benz Cars, and those of commercial vehicles are the total of Daimler Trucks, Mercedes-Benz Vans and Daimler Buses. Production volume shows the total of both divisions.|
|2.||Totals of sales and EBIT include the data of Financial Services Division.|
Daimler aims to refresh the record sales volume and revenue in 2012 as well
|Global automotive market||Daimler sees that the 2012 global market will expand by about 4% thanks to the growth of US and Asian markets.|
|Daimler's business results||Daimler will hold initial targets. It plans to refresh the 2011 record-setting levels of sales volume and revenue and to have an EBIT comparable to the 2011 level.|
|New models||It will launch the new SUV GL-Class and a new compact car A-Class in September, and a new wagon CLS Shooting Brake in October.|
Source: News reports and the documents released from each company during their financial statement announcements.
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