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FCA Spinning off 10% shares in Ferrari

Discussion in 'Fiat Global News' started by pra.agar, Oct 30, 2014.

  1. Ichimaru

    Ichimaru Regolare

    Messages:
    376
    Gurgaon, India
    @prabhjot
    Which mean FIAT could no longer be called "Ferrari in affordable trim"?
    I mean Ferrari would no longer be owned by FIAT or would it still be but as a company independent of FCA?
  2. prabhjot

    prabhjot Esperto

    Messages:
    2,455
    delhi ncr
    There is NO 'Fiat Spa.' anymore.

    'Fiat' is ONLY the name of a BRAND now, NOT a company.

    One of so many in the FCA + Exor fold, from New Holland tractors to Ferrari super/hyper-cars.
  3. Ichimaru

    Ichimaru Regolare

    Messages:
    376
    Gurgaon, India
    i know there is no Fiat Spa....but now Ferrari would not be under FCA anymore, right? If that's correct why only 10% spin off?
  4. prabhjot

    prabhjot Esperto

    Messages:
    2,455
    delhi ncr
    So that EXOR/Agnelli family can, the principals with Marchionne as their agent, retain total control of it, even as they gather the ultra-low-cost (equity) funding to retire their high-cost debt etc.
  5. prabhjot

    prabhjot Esperto

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    2,455
    delhi ncr
    https://news.allpar.com/index.php/2...drives-strong-quarter-for-fiat-chrysler-29376

    A significant improvement in FCA's financial position, even BEFORE the 10% spin-oof stake sale proceeds are used to retire about a billion dollars of high-cost debt.

    BIG improvement in profit margins in N America: up to 7.5+%, an amazing improvement in a very short period.

    FCA is making meaningful profits in Europe too, now, having grown better-than-market-average in the rebounding European ecocnomy.

    China deliveries are down a lot, but profits are still sizeable, and localized Jeep-s haven't even launched yet. However, that market is likely going to see a considerable slowdown, for everyone, but perhaps FCA can/will grow 'counter-cyclically' given that Jeep is a very highly regarded name there, and will be available at localized-manufacture prices by early 2016.

    LatAm, though, is down the drain: profitable significantly for FCA last year, heavy losses this year so far, the recession there is severe, esp in Brazil (and Argentina.)
    Anup likes this.
  6. prabhjot

    prabhjot Esperto

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    2,455
    delhi ncr
    FCA will surely recieve a bounty of around, and maybe sizeably more than, a billion dollars for its 10% in Ferrari, to be used apparently for retiring high-cost debt etc.

    However, FCA's share price, post-spinoff, could be in serious trouble, once Ferrari's disproportionate profits, prestige and revenues are off its balance-sheet, if the numbers (profit margins etc) aren't as good for investors.

    Remains to be seen: the numbers may well be decent and more importantly will very very likely be fast-improving, what with the strong USDollar, booming sales of the renegade+500X+all the other suv-s in the US and elsewhere, and lots of all-new models launching soon (Aegea, Chrysler 100, chrysler Minivan, Alfa Romeo Giulia, etc), strong sales and marketshare growth in rebounding europe, Jeep localized production launch in china etc?

    FCA pays no dividends to its shareholders, not even to the Agnelli-s/EXOR (at least till 2018), after all, and moreover has seen such a huge appreciation in its share price since listing less than a year ago (among the, if not the, best-performing OEM car company stock i believe?)

    All the merger/consolidation talk from marchionne and elkann has a lot to do, it seems, with shoring-up the high-performing FCA stock DESPITE the spin-off of Ferrari.
  7. prabhjot

    prabhjot Esperto

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    2,455
    delhi ncr


    This video by investor grup Greenwwod Capital, who have a very bullish, imo quite rightly, view of FCA sales and profits/margins even-further prospects, even post-Ferrari spinoff, is essential viewing.
  8. prabhjot

    prabhjot Esperto

    Messages:
    2,455
    delhi ncr
    The global stock market rout (and general economic and trade growth slowdown) that began yesterday has FCA shares falling less than most other automotive firms. FCA shares are higher now than Ford's. Even the VW brand is hurting badly, with sales down last month 6%+. etc.

    http://news.allpar.com/index.php/2015/08/fiat-chrysler-stock-fares-better-than-ford-gm-29753

    How come? FCA is very cost competitive in recessionary brazil and will soon, Marchionne claims, be profitable there again, since most of its current losses aren't due the recession so much as the dealer and brand launch costs for JEEP and the locally-made Renegade, which is entering a higher segment and price point than FCA has ever played in the brazilian car market's past. It is more or less already the best selling small-SUV. Even the new plant where it and other premium-priced jeeps and fiats will be made (Pernambuco) has been built with tons of government cost and credit-subsidies, so FCA is well-hedged against the long-term slowdown or recession.

    FCA is also strongest in the only markets holding up (the USA and recently and foreseeably Europe), and weakest in the markets that are now in fast slowdown (i.e., China). But even in a slowed-down or recessionary China (a humuguous market) FCA will most likely fare better than most foreign firms, since they're launching the very popular-in-China JEEP brand's locally-made SUVs later this year and next from their new plants, which too have massive sharing of costs and investments by their govet-backed Chinese JV partners.

    FCA's ability to weather relative-currency-over/under-valuation is now exceptionally strong, since it will increasingly build cars and get supplies from countries, like India or Brazil or turkey or Mexico or China or Serbia, which have experienced currency devaluation, relative to the again-mighty US$, in which so many of its sales are billed, even as its balance sheet is in the depreciated Euro.

    However: (a) if the global stock market turmoil and rout aggravates, the Ferrari 10% IPO valuations may fall well-short of the universally anticipated 1billion dollars for the remainder-FCA.

    (b) slowing/collapsing Chinese luxury sales will hurt Maserati which is notably popular in China, and will mean that the new Alfa-s will struggle to cash-in on the great Chinese car market, and its love of European and American cars.

    (c) big or a clutch of smaller 'deals' that further Marchionne's long-held and advocated argument in favour of mergers and consolidation becomes much likelier, but also trickier since financial valuations are currently so volatile

    (d) FCA is profitable, but as yet weak in India, the other huge and growing-somewhat, stable car market. However here too FCA's profitablity, unlike most other firms, means that the new push in India (Abarths, upcoming Jeeps, and a full-lineup refresh-cum-expansion by 2018) and for exports out-of-India based on another shared-risk, shared-investment JV model with Tata, and a supplier-model with Suzuki, FCA is healthier placed financially than most firms other than Suzuki and Hyundai.

    (e) FCA, or many of its brands, is/are still missing from many countries and many segments of the market, and so relative sales and revenue/profit-growth prospects are high, EVEN in a slowed-down global economy, especially with Jeep, with Alfa, with some of the new Fiats (Aegea etc) and especially in the US and Europe and India too.
  9. prabhjot

    prabhjot Esperto

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    delhi ncr
    http://www.bloomberg.com/news/artic...o-be-oversubscribed-ahead-of-new-york-listing

    Marchionne's pulled-off excellent timing of the Ferrari 10% IPO: beating the severe China-slowdown-correlated stock- and currency-market slump of a few weeks ago.

    Ferrari NYSE ticker codename is......'RACE', ha!

    Net-net (debts being transferred to the new spun-off Ferrari, high-cost debt being retired, pre-IPO payoffs to FCA by Ferrari) the gain to FCA's balance sheet will be around 4 billion$ apparently.

    Needless to say Marchionne remains ceo of both fca and ferrari just as the Agnelli-s remain the majority owners/controllers of both firms. They've basically sold Ferrari back to themselves at a HUGE profit, with full regulated-market-pricing rather than rigged prices!
    Ichimaru and VIJENDRA SINGH like this.
  10. prabhjot

    prabhjot Esperto

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    2,455
    delhi ncr
    http://www.autonews.com/article/201...rari-faithful-drive-ipo-price-to-top-of-range

    And they've pulled it off amazingly well: another big feather in the Marchionne cap.

    Apparently, the net benefit is 6 billion dollars+ to the remaining FCA.

    Meanwhile EXOR, the Agnelli holding company also headed like FCA and Ferrari by Marchionne is great fiscal shape too. Watchout GM/OPEL?! Suzuki are you game?! etc.

    The US automart is still very booming, and is shifting hugely to SUV-s and trucks: FCA's sweet spot given JEEP and RAM. They're rapidly raising profit margins there (already up to around 7%), they've said they'll be near abouts the 10 odd% margin Ford and GM. Europe's regaining traction, just when the Renagade, the 500X, the Alfa Giulia etc, and the Aegeax3 are out or will be soon. Meanwhile JEEP's started production and presumably very price competitive exports out of China, with another whole plant due to operationalized in 2016 (for the susw Renagade etc), and of course the India JEEP production too in 2017. The giant new state of the art Brazilian susw plant already has a huge hit (despite then severe recession in LatAm) with its first product the renagade and will have its hands even fuller soon with the next susw launches, including export-to-US Fiat Toro-s (as a Ram) and the JEEP C-suv/Compass.

    NET-NET: FCA and Marchionne's vision is set fair to really reach its final, highest stage: save Fiat, then save Dodge, Chrysler, Jeep and Ram, now Alfa, globalize Jeep, keep up the good going at Maserati....and perhaps a merger or two more?!

    FCA is very likely to be the most successful and best-growing large automotive firm for several years, all else being equal, with hoary old brands not just saved but rendered buoyant and potent with ACTUALLY realized potent-ial. It already is in share price growth terms this past year.....Marchionne's a propah hero, already, but he says he'll be around till 2020, so!

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