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03 Aug 2021

Stellantis Reports Record H1 Pro Forma(1) Results with 11.4% Margin, All Segments Profitable Full-Year Guidance Raised to ~10% Adjusted Operating Income(2) Margin

Stellantis Reports Record H1 Pro Forma(1) Results with 11.4% Margin, All Segments Profitable Full-Year Guidance Raised to ~10% Adjusted Operating Income(2) Margin

Stellantis Reports Record H1 Pro Forma(1) Results with 11.4% Margin, All Segments Profitable Full-Year Guidance Raised to ~10% Adjusted Operating Income(2) Margin

NOTES

(1) Completed merger of Peugeot S.A. (“PSA”) with and into Fiat Chrysler Automobiles N.V. (“FCA”) on January 16, 2021 (“Merger”). On January 17, 2021, combined company was renamed Stellantis N.V.(“Stellantis” or “Group”). PSA was determined to be the acquirer for accounting purposes, therefore, the historical financial statements of Stellantis represent the continuing operations of PSA, which also reflect the loss of control and the classification of Faurecia S.E. (Faurecia) as a discontinued operation as of January 1, 2021 with the restatement of comparative periods. Acquisition date of business combination was January 17, 2021, therefore, results of FCA for the period January 1 -16, 2021 are excluded from H1 2021 results unless otherwise stated. H1 2021 Pro Forma results are presented as if the Merger had occurred on January 1, 2020 and include results of FCA for the period January 1 –16, 2021. H1 2020 represents results of the continuing operations of PSA only and are not directly comparable to previously reported results of PSA and reflect accounting policies and reporting classifications of the Group. H1 2020 Pro Forma results are presented as if the Merger had occurred on January 1, 2020. The fair values assigned to the assets acquired and liabilities assumed are preliminary and will be finalized during the one-year measurement period from the acquisition date, as provided for by IFRS 3.
(2) Adjusted operating income/(loss) excludes from Net profit/(loss) from continuing operations adjustments comprising restructuring, impairments, asset write-offs, disposals of investments and unusual operating income/(expense) that are considered rare or discrete events and are infrequent in nature, as inclusion of such items is not considered to be indicative of the Group's ongoing operating performance, and also excludes Net financial expenses/(income), Tax expense/(benefit) and Share of the profit of equity method investees. Unusual operating income/(expense) are impacts from strategic decisions as well as events considered rare or discrete and infrequent in nature, as inclusion of such items is not considered to be indicative of the Group's ongoing operating performance. Unusual operating income/(expense) includes, but may not be limited to: impacts from strategic decisions to rationalize Stellantis' core operations; facility-related costs stemming from Stellantis' plans to match production capacity and cost structure to market demand, and; convergence and integration costs directly related to significant acquisitions or mergers.
For the six months ended June 30, 2021, Pro Forma Adjusted operating income includes the Adjusted operating income of FCA for the period January 1 - January 16, 2021. For the six months ended June 30, 2020, Pro Forma Adjusted operating income includes the Adjusted operating income result of FCA for the period January 1 - June 30, 2020.
(3) Industrial free cash flows 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; contributions of equity to joint ventures and minor acquisitions of consolidated subsidiaries and equity method investments; adjusted for: net intercompany payments between continuing operations and discontinued operations; proceeds from disposal of assets and contributions to defined benefit pension plans, net of tax. For the six months ended June 30, 2021, Pro Forma Industrial free cash flows includes the Industrial free cash flows of FCA for the period January 1 - January 16, 2021.The timing of Industrial free cash flows may be affected by the timing of monetization of receivables and the payment of accounts payables, 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.
(4) Combined shipments include shipments by the Group's consolidated subsidiaries and unconsolidated joint ventures, whereas Consolidated shipments only include shipments by the Group's consolidated subsidiaries.
(5) Adjusted net profit/(loss) is calculated as Net profit/(loss) from continuing operations excluding post-tax impacts of the same items excluded from Adjusted operating income, as well as financial income/(expenses) and tax income/(expenses) considered rare or discrete events that are infrequent in nature. For the six months ended June 30, 2021, Pro Forma Adjusted net profit includes the Adjusted net profit of FCA for the period January 1 - January 16, 2021. For the six months ended June 30, 2020, Pro Forma Adjusted net profit includes the Adjusted net profit of FCA for the period January 1 - June 30, 2020.
(6) Adjusted diluted EPS is calculated by adjusting Diluted EPS from continuing operations for the impact per share of the same items excluded from Adjusted net profit/(loss). For the six months ended June 30, 2021, the calculation of Pro Forma Adjusted diluted EPS includes the Net profit of FCA for the period January 1 - January 16, 2021. For the six months ended June 30, 2020, the calculation of Pro Forma Adjusted diluted EPS includes the Net profit of FCA for the period January 1 - June 30, 2020.
(7) Source: IHS Global Insight, Wards, China Passenger Car Association and Group estimates.
(8) Industrial net financial position is calculated as Debt plus derivative financial liabilities related to industrial activities less (i) cash and cash equivalents, (ii) financial securities that are considered liquid, (iii) current financial receivables from the Group or its jointly controlled financial services entities and (iv) derivative financial assets and collateral deposits; therefore, debt, cash and cash equivalents and other financial assets/ liabilities pertaining to Stellantis’ financial services entities are excluded from the computation of the Industrial net financial position. Industrial net financial position includes the Industrial net financial position classified as held for sale. Industry and market share information is derived from third-party industry sources (e.g. European Automobile Manufacturers Association (ACEA), Ward’s Automotive, Associação Nacional dos Fabricantes de Veículos Automotores (ANFAVEA)) and internal information

  • Represents PC and LCVs, except as noted below
  • India & Asia Pacific reflects aggregate for major markets where Group competes (Japan (PC), India(PC), South Korea (PC + Pickups), Australia and South East Asia)
  • Middle East and Africa exclude Iran, Sudan and Syria
  • Maserati market share and industry information is derived from IHS data, Maserati competitive segment and internal information EU30 = EU27 (excluding Malta) + Iceland + Norway+ Switzerland + UK

 

APPENDIX

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
This Unaudited Pro Forma Condensed Consolidated Financial Information has been prepared to give effect to completion of the merger of PSA and FCA to create Stellantis, which was completed on January 17, 2021, as if it had been completed on January 1, 2020. The Unaudited Pro Forma Condensed Consolidated Financial Information includes the unaudited pro forma condensed consolidated income statement for the six months ended June 30, 2021 and 2020 and the related explanatory notes (the “Unaudited Pro Forma Condensed Consolidated Financial Information”). The Unaudited Pro Forma Condensed Consolidated Financial Information has been prepared for illustrative purposes only with the aim to provide comparative period income statement information, and does not necessarily represent what the actual results of operations would have been had the Merger been completed on January 1, 2020. Additionally, the Unaudited Pro Forma Condensed Consolidated Financial Information does not attempt to represent, or be an indication of, the future results of operations or cash flows of Stellantis. No pro forma statement of financial position has been presented as the effects of the merger have been reflected in the Semi-Annual Condensed Consolidated Statement of Financial Position of Stellantis as of June 30, 2021.
The Unaudited Pro Forma Condensed Consolidated Financial Information presented herein is derived from (i) the Semi-Annual Condensed Consolidated Income Statement of Stellantis for the six months ended June 30, 2021 and 2020, (ii) FCA’s Semi-Annual Condensed Consolidated Income Statement for the three and six months ended June 30, 2020, contained in FCA’s Semi-Annual Report on Form 6-K furnished to the SEC on July 31, 2020, and (iii) FCA’s accounting records for the period from January 1, 2021 to January 16, 2021. The Unaudited Pro Forma Condensed Consolidated Financial Information should be read in conjunction with the historical consolidated financial statements referenced above and the accompanying notes thereto.
The historical consolidated financial statements of Stellantis and FCA are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and in accordance with IFRS as adopted by the European Union. There is no effect on the historical consolidated financial statements resulting from differences between IFRS as issued by the IASB and IFRS as adopted by the European Union. The Unaudited Pro Forma Condensed Consolidated Financial Information is prepared on a basis that is consistent with the accounting policies used in the preparation of the Semi-Annual Condensed Consolidated Financial Statements of Stellantis as of and for the six months ended June 30, 2021 and 2020.
The historical consolidated financial information has been adjusted in the accompanying Unaudited Pro Forma Condensed Consolidated Financial Information to give effect to unaudited pro forma events that are directly attributable to the merger and factually supportable. Specifically, the pro forma adjustments relate to the following:

  • The preliminary purchase price allocation, primarily to reflect adjustments to depreciation and amortization associated with the acquired property, plant and equipment and intangible assets with a finite useful life, as well as a reduction in interest expense related to the fair value adjustments to financial liabilities.
  • The alignment of accounting policies of FCA to those applied by Stellantis.
  • The elimination of intercompany transactions between FCA and PSA.

The pro forma adjustments relate to the two periods from January 1, 2020 to June 30, 2020 and from January 1, 2021 to January 16, 2021.
The Unaudited Pro Forma Condensed Consolidated Financial Information does not reflect any anticipated synergies, operating efficiencies or cost savings that may be achieved, or any integration costs that may be incurred, following the completion of the merger.

 

 

For the six months ended June 30, 2020

The pro forma adjustments are described in further detail below.
A. Intangible assets

The fair value of brands (Jeep, Ram, Dodge, Fiat, Maserati, Alfa Romeo and Mopar) was determined through an income approach based on the relief from royalty method, which requires an estimate of future expected cash flows. The useful life associated with the brands is determined to be indefinite. For capitalized development expenditures, the fair value has been assessed according to a multi-criteria approach based on relief from royalty method and an excess-earning method. The fair value for the Dealer network has been assessed using the replacement cost method.
Amortization of intangible assets has been calculated on the fair value taking into account the estimated remaining useful life of the acquired assets. The related change in amortization as a result of the fair value adjustment to intangible assets was a net decrease in amortization expense of €40 million and €482 million for the period January 1 to January 16, 2021, and for the six months ended June 30, 2020, respectively, of which €40 million and €480 million has been recorded within Research and development costs in relation to capitalized research and development costs and other intangible assets, respectively, and €4 million has been recorded within Selling, general and other costs in relation to the dealer network and €(2) million has been recorded within Cost of revenues in relation to reacquired rights for the six months ended June 30, 2020 in the Unaudited Pro Forma Condensed Consolidated Financial Information.

B. Property, plant and equipment

The fair value of property, plant and equipment was determined primarily through the replacement cost method, which requires an estimation of the physical, functional and economic obsolescence of the related assets. A market approach, which requires the comparison of the subject assets to transactions involving comparable assets, was applied to determine the fair value of land. The fair value of certain assets was determined through an income approach.
Depreciation has been calculated on the fair value taking into account the estimated remaining useful life of the acquired assets. The related change in depreciation as a result of the fair value adjustment to property, plant and equipment was a decrease in depreciation expense of €47 million and €568 million for the period January 1 to January 16, 2021, and for the six months ended June 30, 2020, respectively, of which €45 million and €546 million has been recorded within Cost of revenues and €2 million and €22 million within Selling, general and other costs in the Unaudited Pro Forma Condensed Consolidated Financial Information.

C. Financial liabilities

Purchase price adjustments were recognized to step up to fair value the financial liabilities not measured at fair value based on quoted market prices for listed debt and based on discounted cash flow models for debt that is not listed. The fair value adjustments to financial liabilities resulted in a decrease in interest expense due to the decrease of the effective interest rate based on current market conditions, of €21 million and €236 million for the period January 1 to January 16, 2021 and for the six months ended June 30, 2020, respectively, and has been recorded within Net financial income (expense) in the Unaudited Pro Forma Condensed Consolidated Financial Information.

D. Other

Primarily reflects:

  • the recognition of additional revenue of €2 million and €28 million for the period January 1 to January 16, 2021 and for the six months ended June 30, 2020, respectively, as a result of a step up to fair value of deferred revenue relating to extended warranty service contracts, as well as additional finance costs of €4 million and €52 million for the period January 1 to January 16, 2021 and for the six months ended June 30, 2020, respectively, due to the recognition of the fair value adjustments of the related liabilities.
  • the reversal of the income statement impact of €7 million and €121 million for the period January 1 to January 16, 2021 and for the six months ended June 30, 2020, respectively, of certain prepaid assets that were written off as part of the purchase price allocation.
  • The step up in the value of inventories has not been recognized as a pro forma adjustment as this impact has been recognized in Stellantis results for the six months ended June 30, 2021.

E. Tax expense

Represents the tax effects on the pro forma adjustments reflected in the unaudited pro forma condensed consolidated income statement,
calculated based on statutory tax rates applicable in the relevant jurisdictions.

Note 4 – Other Adjustments
Other adjustments mainly include the following:

  • the elimination of the intercompany transactions with Sevel S.p.A. (“Sevel”) in the Stellantis Semi-Annual Condensed Consolidated Income Statement for the six months ended June 30, 2020 of €255 million. Sevel is a joint operation that was previously owned 50 percent each by both PSA and FCA. Upon completion of the Merger, Stellantis holds 100 percent of Sevel, which is fully consolidated from that date;
  • The alignment of FCA’s accounting policies to Stellantis accounting policies resulting in a net decrease in Net profit of €136 million for the six months ended June 30, 2020, primarily relating to an increase in Research and development expenditures expensed.
  • the alignment of the classification of certain items to align to Stellantis’ income statement presentation.

Note 5 - Pro Forma Earnings per Share

Pro Forma basic earnings per share is calculated by dividing the Pro Forma Net profit from continuing operations attributable to the owners of the parent by the Pro Forma weighted average number of shares outstanding, as adjusted for the merger.
Pro Forma diluted earnings per share is calculated by adjusting the historical diluted weighted average number of shares outstanding with the Pro Forma weighted average number of dilutive shares outstanding, as adjusted for the merger.
Regarding the Pro Forma basic and diluted earnings per share from continuing operations for the six months ended June 30, 2020:
(i) Pro forma weighted average number of outstanding Stellantis common shares for the six months ended June 30, 2020 includes PSA weighted
average number of outstanding common shares for the six months ended June 30, 2020 converted with the merger exchange ratio of 1.742 and
Stellantis common shares issued at the merger date;
(ii) The number of the equity warrants on PSA ordinary shares delivered to General Motors, amounting to 39,727,324, have been included in the
diluted number of shares and converted with the merger exchange ratio of 1.742;
(iii) Pro forma weighted average number of outstanding Stellantis common shares resulting from dilutive equity instruments performance share
plans issued by PSA and converted with the merger exchange ratio of 1.742; and
(iv) Pro forma weighted average number of outstanding Stellantis common shares resulting from the equity instruments issued under FCA’s equity
incentive plan

 

SAFE HARBOR STATEMENT
This document, in particular references to “2021 Guidance”, contains forward-looking statements. In particular, statements regarding future financial performance and the Company’s expectations as to the achievement of certain targeted metrics, including revenues, industrial free cash flows, vehicle shipments, capital investments, research and development costs and other expenses at any future date or for any future period are forward-looking statements. These statements may include terms 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. Forward-looking statements are not guarantees of future performance. Rather, they are based on the Group’s current state of knowledge, future expectations and projections about future events and are by their nature, subject to inherent risks and uncertainties. They relate to events and depend on circumstances that may or may not occur or exist in the future and, as such, undue reliance should not be placed on them.
Actual results may differ materially from those expressed in forward-looking statements as a result of a variety of factors, including: the impact of the COVID-19 pandemic; the ability of the Group to launch new 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; the Group’s ability to expand certain of their brands globally; its ability to offer innovative, attractive products; its 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, 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 the Group’s defined benefit pension plans; the ability to
provide or arrange for access to adequate financing for dealers and retail customers and associated risks related to the establishment and operations of financial services companies; the ability to access funding to execute the Group’s business plans and improve their businesses, financial condition and results of operations; a significant malfunction, disruption or security breach compromising information technology systems
or the electronic control systems contained in the Group’s vehicles; the Group’s ability to realize anticipated benefits from joint venture arrangements; 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, parts, components and systems used in the Group's vehicles; 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; the risk that the operations of Peugeot S.A. and Fiat Chrysler Automobiles N.V. will not be integrated successfully and other risks and uncertainties.
Any forward-looking statements contained in this document speak only as of the date of this document and the Group disclaims any obligation to update or revise publicly forward-looking statements. Further information concerning the Group and its businesses, including factors that could materially affect the Group’s financial results, is included in the Group's reports and filings with the U.S. Securities and Exchange Commission, AFM, CONSOB and AMF.
On August 3, 2021 at 3:00 p.m. CEST / 9:00 a.m. EDT, a live webcast and conference call will be held to present the First Half Results 2021 of Stellantis. The webcast and recorded replay will be accessible under the Investors section of the Stellantis corporate website at (https://www.stellantis.com/en). The supporting documents are expected to be posted under the Investors section of the Stellantis corporate website at
approximately 8:00 a.m. CEST / 2:00 a.m. EDT on August 3, 2021.

Amsterdam, August 3, 2021
 

 

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