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This document has been translated into English for the convenience of international
readers. The original Italian document should be considered the authoritative version.
1
"Fiat Industrial S.p.A."
Registered Office - via Nizza 250, Turin, Italy
Share capital €1,919,433,144.74
Turin Companies Register
no. 10352520018
* * * * *
Minutes of the Ordinary General Meeting of
shareholders held on April 8, 2013.
* * * * *
On the eighth of April two-thousand and thirteen,
at Centro Congressi Lingotto, via Nizza 280, Turin,
at approximately 11 a.m., the Ordinary General
Meeting of Shareholders, convened on single call
with a public notice of February 27, 2013 on the
Company’s website, as well as through an extract in
the newspaper La Stampa to discuss and vote on the
following
Agenda
1. Annual Report:
a) Motion for Approval of the Statutory Financial
Statements at December 31, 2012, Allocation of
Profit and Dividend Distribution;
b) Compensation Policy pursuant to Article 123-ter
of Legislative Decree 58/98.
2. Election of Board of Statutory Auditors:
2
a) Election of Regular Auditors, Alternate
Auditors and Chairman;
b) Compensation for Statutory Auditors.
In accordance with the By-laws, the meeting is
presided over by the chairman of the board, Sergio
MARCHIONNE, who firstly declares:
- that, as stated above, the notice calling the
meeting was published on February 27, 2013 on the
Company’s website, as well as in extract form in
the newspaper La Stampa, in accordance with Article
7 of the By-laws and the applicable requirements of
law;
- that the requirements for public disclosure have
been duly fulfilled;
- that 1,294 shareholders representing 788,374,929
shares are present or represented, out of a total
1,222,568,882 shares outstanding, each with a
nominal value of €1.57;
- that the meeting is validly constituted and,
accordingly, any resolutions passed are also valid.
With the consent of shareholders, the Chairman asks
Ettore MORONE to act as secretary and states for
the record:
- that, in addition to the Chairman himself, the
following directors are also present:
3
Alberto BOMBASSEI
Gianni CODA
John Philip ELKANN
Maria Patrizia GRIECO
Libero MILONE;
- that the following regular statutory auditors are
also present:
Paolo PICCATTI – Chairman
Valter CANTINO
Lucio PASQUINI;
- that the following directors are absent with
justification:
Robert Glenn LIBERATORE
Giovanni PERISSINOTTO
Guido TABELLINI
Jacqueline TAMMENOMS BAKKER
John ZHAO;
- that the secretary of the board, Roberto RUSSO,
is also present;
- that he has ascertained, through his delegates,
the identity and legitimacy of the persons in
attendance;
- that the list of names of those participating at
the shareholder meeting, either directly or by
proxy, with details of the respective number of
4
shares represented, will be attached to the present
minutes (attachment "E").
The Chairman states that, on the basis of the
correspondence received to date, the following
parties, that hold more than 2% of voting shares,
are present:
* Giovanni Agnelli e C. S.a.p.a. 401,137,677
shares, equal to 32.811%, of which 366,927,900
shares through its subsidiary EXOR S.p.A. and
34,209,777 shares through its subsidiary Fiat
S.p.A.
* Harris Associates LP 61,457,048 shares, equal to
5.027%
* BlackRock Inc. 49,298,625 shares, equal to
4.032% (party which is not subject to the
disclosure requirements of Article 119-bis (7) (8)
of the Issuer Regulations)
* The Oakmark International Fund 33,256,500
shares, equal to 2.720% (party which is not
subject to the disclosure requirements of Article
119-bis (7) (8) of the Issuer Regulations)
* Government of Singapore Investment Corporation
Pte Ltd 27,832,792 shares, equal to 2.277%.
The Chairman states that, if shareholders have no
objections, students from the University of Turin
5
and analysts will observe the proceedings, as well
as journalists, in a room reserved for them.
The Chairman also points out that representatives
of the independent audit firm are also present,
along with qualified personnel to facilitate
conduct of the meeting and points out that anyone
wishing to leave the meeting prior to its
conclusion must report this as they exit so that
the number of votes in attendance can be updated.
Before passing to the items on the agenda, the
Chairman reminds those in attendance that,
pursuant to Article 5.2 of the Procedures for
General Meetings attached to the Report on
Corporate Governance which was distributed,
documentation that was placed on record and made
available to those concerned will not be read out.
He also points out that anyone wishing to speak in
relation to the items on the agenda, assuming they
have not already done so, must reserve time to
speak at the secretary’s table and specify the
issue they will discuss.
He reminds everyone that, pursuant to the
Procedures for General Meetings (Article 3.6), the
use of audio/video recording devices by
shareholders is not allowed and mobile phones must
6
be switched off.
He also reminds shareholders who will be called to
speak at the microphone that, as set out in the
Procedures (Article 6.4), statements must be
concise and strictly relevant to the agenda item
being discussed.
He also points out that, pursuant to the above
Procedures (Article 6.6), any speeches which
become a mere disturbance or interference for the
other participants or which are offensive or
improper will not be allowed.
In addition, given the large number of speakers
and on the basis of the abovementioned Procedures
(Article 6.4), the Chairman states that he
considers appropriate the maximum of 5 minutes for
each speaker during which any voting declarations
must also be made – and an additional 2 minutes
for responses to the answers provided.
Shareholder Marco Geremia Carlo BAVA
asks that his opposition be noted in the minutes.
The Chairman
continues by explaining that speeches and
responses will be considered completed once the
maximum time limit has expired and the podium will
automatically be given to the next shareholder.
7
The Chairman then declares the meeting open and
proceeds with the agenda, listing the individual
items.
On the first point1. Annual Report:
a) Motion for Approval of the Statutory Financial
Statements at December 31, 2012, Allocation of
Profit and Dividend Distribution;
b) Compensation Policy pursuant to Article 123-ter
of Legislative Decree 58/98,
the Chairman presents the Group’s results for 2012.
The text of that presentation is provided as
Attachment "A".
The Chairman then reads out the proposals for
approval of the statutory financial statements at
December 31, 2012, allocation of profit and
dividend distribution, the text of which is
provided here below:
"Shareholders,
We submit for your approval the Statutory Financial
Statements at December 31, 2012, which report
profit of €128,609,403 and a retained profit
reserve of €730,913,008.
We propose a dividend of €0.225 per ordinary share,
equivalent to a maximum total distribution of
approximately €275.1 million, consisting of the
8
remaining profit for 2012 of €122,178,933 –
following allocation of €6,430,470 to the legal
reserve – and a maximum of €152,899,065.45 from the
retained profit reserve.
This proposal is in line with the policy adopted by
the Board of Directors to distribute between 25%
and 35% of the Group’s consolidated profit.
The dividend will be payable on April 25, 2013 (ex-
dividend date of April 22) on shares on record at
April 24, 2013."
The Chairman then states that, in relation to the
Compensation Policy, the report of directors that
was distributed (Attachment "B") contains Section
One of the Compensation Report on which
shareholders are being asked to vote pursuant to
Article 123-ter of Legislative Decree 58/98.
He then passes to discussion of the first item on
the agenda and asks the individuals who have
reserved speaking time to take the microphone when
called to do so and to ask questions which are of
general interest, relevant to the resolution,
based on adequate information, therefore making
statements which are concise and pertinent and, in
any event, limited to a maximum of 5 minutes –
during which, as stated, any voting declarations
9
must also be made – and an additional 2 minutes
for responses to the answers provided.
He then reminds everyone that when the time has
expired, the podium will pass to the next
shareholder in order and that a brief tone will be
sounded 1 minute before a speaker’s time expires.
He then explains that the minutes for the meeting
will not include or have attached statements or
parts of statements which are not actually read
for the benefit of those in attendance and
pertinent to the items being addressed.
He then states that, as provided under Article 127-
ter of Legislative Decree 58/98, numerous
questions, many very detailed, had been received
before the deadline specified in the meeting notice
(5 April 2013). Written responses have been given
directly to the individuals that submitted
questions and copies of the questions received and
the responses provided are available from staff
members at the entrance to the hall for those who
may be interested.
He then declares the discussion open on the first
item of the agenda.
A summary is provided below.
Shareholder Franco BORLENGHI
10
presents himself as a small shareholder that is
loyal to the Company and states that he always
finds it interesting and enjoyable to take part in
the shareholder meetings just as he is present
again this year for the approval of the Company’s
results;
he points out that the Company closed 2012 with a
net profit of €921 million, a result in the range
estimated by analysts of between €900 million and
€955 million, and representing an increase over the
€701 million reported for 2011;
he highlights that revenues have increased and
trading profit has jumped by 23%, to exceed €2
billion, and he considers the proposed dividend of
€0.225 per share to be attractive;
in his view the only negative aspect is net
industrial debt which, at December 31, 2012, had
increased by €400 million to €1.6 billion, which is
higher than expected by analysts;
he is of the opinion that for the current year
improvements can be expected despite the fact that
the prolonged crisis continues to affect all
industry sectors in the country and he would like
to know what the Chairman’s forecasts are;
he asks for information with regard to the planned
11
merger with the U.S. subsidiary CNH, which operates
in the agricultural and construction equipment
sector;
he concludes by thanking Mr. MARCHIONNE in advance
for his response, announces his vote in favor of
the financial statements and asks that he be sent a
copy of the minutes.
Shareholder Jutta SPERBER
expresses her appreciation of the good results
achieved in 2012;
wishes to have more information with regard to
measures adopted by the Company to improve the
quality of CNH’s products.
Shareholder Marco Geremia Carlo BAVA
announces that his websites are www.marcobava.it
and marcobava.eu;
he gives notice that he intends to file an action
for liability against Mr. MARCHIONNE, asking that
this be discussed and voted upon for the reasons
that can be read in the attachment to the proxy
materials published on his website and with regard
to which he intends to summarize the main points;
he states that other motivations can be found in
the responses to the questions presented prior to
the shareholder meeting, for those who have not
12
already obtained a copy;
he informs those present that his website also
provides the text of the ruling in his favor for
the legal complaint presented against him by Mr.
MARCHIONNE in 2008 for having said, among other
things, that "he is a reckless and bold
illusionist" and that FIAT security is responsible
for the death of Edoardo AGNELLI because of their
lack of vigilance;
he notes, as contained in the ruling, that if
someone had been responsible for protecting Edoardo
AGNELLI they hadn’t done their job properly,
regardless of whether he was killed or committed
suicide;
he presents the new website
www.omicidioedoardoagnelli.net where it is possible
to find all the developments on the case, well
summed up in the book "Agnelli segreti" written by
MONCALVO and published by Vallecchi;
he asks under what law the company ORIONE is
authorized to conduct its activities despite the
fact that Italian law does not recognize the body
guard profession, but allows for registered
security guards for the protection of assets only,
not people directly, under Article 134 of the
13
Italian decree on public security, with the risk
that those acting in place of law enforcement
agencies may be guilty of committing a criminal
offense under Article 347 of the Criminal Code;
he says that, to date, he has not been informed
whether the ruling in his favor has been appealed,
and therefore believes he is free to talk publicly
pursuant to Article 51 of the Criminal Code, given
the ruling already referred to which can be read on
his website;
he notes that the ruling says that his statements
were pronounced in light of constitutional
regulations with reference not only to Article 21
of the Constitution, but also to Article 47
according to which the Republic encourages private
investors to hold direct and indirect shareholdings
in the nation’s large industrial enterprises, such
as FIAT;
he notes that for these reasons he intends to
establish an association called "New model of
development", which will entail, in Article 1,
amongst other things, the protection of individual
investment in all of its forms;
he is of the opinion that the difference between
Giovanni AGNELLI and Mr. MARCHIONNE is that with
14
the former it was possible to have a difference of
opinion and he made decisions after listening to
the dissenting opinion, whereas Mr. MARCHIONNE does
not accept debate but rather seeks to suffocate
dissent through lawsuits;
he states that his website contains his materials
soliciting proxy representation to vote against
approval of the financial statements in question
and for the liability action against Mr.
MARCHIONNE; he asks for confirmation as to whether
the latter’s tax residence is still in Zug,
Switzerland, in the house with the red and grey
shutters, as shown on television;
he reports that salaries are provided in a very
obscure part of the corporate website, where it is
reported that Mr. MARCHIONNE received stock grants
and then sold a portion of them for tax reasons,
and he asks how those who do not have stock grants
are able to pay their taxes;
he informs those present that attachment 1 to his
proxy material provides the reasons for voting NO
to the proposals of the board: he reports a problem
for the Civis of Bologna, which does not work; he
would like to know how many blue and white collar
workers are currently on temporary layoff and why
15
FIAT continues to report a 4% loss of on invested
liquidity.
Following expiry of the allotted time, Mr. BAVA
continues to speak despite the microphone being
switched off.
Shareholder Giovanni ANTOLINI
complains to the Chairman, the board and
shareholders about having once again to speak at a
shareholder meeting while another shareholder is
talking;
he asks for order to be restored to the meeting;
he asks that the Procedures for General Meetings be
revised and that the Chairman be given the
authority to regulate speeches depending on whether
they are more or less constructive, interesting or
lengthy;
he states that he is not used to speaking at the
same time as others and hopes that his right to
speak be assured more effectively.
The Chairman
asks Mr. ANTOLINI to continue speaking and assures
him that what he says can be heard perfectly well.
Shareholder Giovanni ANTOLINI
examines a series of ratios which he considers give
a rather interesting profile of the Company;
16
he notes that, if one looks at net revenues for
each of the Company’s operating regions, it can be
seen that the ratio between the Group’s global
revenues, which are €25,765,000, and the number of
employees, 68,257,000, 0.37 to 1; he reminds those
in attendance that last year this ratio was 0.36 to
1, which represents an improvement that has
repercussions for the whole Group;
he says that if one analyzes employees and revenues
by geographical area, it can be noted that in Italy
revenues were €2,045 million, compared with a
workforce of 18,576, a ratio of 0.11 to 1,
representing about a third of the average for the
company;
he notes that for Europe the ratio is 0.3479 to 1,
0.638 to 1 for North America and 0.398 to 1 for the
Mercosur area;
he believes that these figures should be considered
very carefully on the basis of the type of
production, because they are certainly linked to
the activity carried out in each different area of
the globe;
he states that the situation he highlighted is
worrying for Italy and notes that the problems in
Italy are probably not encountered by the Company
17
in other parts of the world.
Shareholder Riccardo MOLETTI
says that his question relates to the merger
between the Company and CNH, with the setting up of
a Dutch company, as illustrated by the Chairman;
he is interested in knowing what led FIAT
INDUSTRIAL to transfer its headquarters to Holland
and proposes, if possible, that the by-laws include
the obligation to hold its shareholder meetings in
Turin because he considers it important, despite
the international character of the Company, that
its mind and heart should or rather must remain in
Turin;
he complains about how his comments at last year’s
meeting were recorded in the minutes, as he states
that he had finished his statement within the
allotted time and that the notary’s assistant had
asked for a copy of his statement and he expresses
his surprise that what was reported in the minutes
was excessively brief;
he believes, despite not considering the issues he
raises to be of fundamental importance, that the
shareholder meeting represents an opportunity for
shareholders to meet and discuss "policy", meaning
the "good governance of the company ", in light of
18
the influence which FIAT exercises in Italy and
that these issues are of the utmost importance,
especially in times of crisis such as the one being
faced at present.
Shareholder Corrado RADAELLI
disagrees with how the shareholder meeting is
conducted and the amount of time granted to speak;
he thanks the Company for sending the documentation
he requested and notes that by reading it he
arrived at conclusions that prompted him to send
observations and questions by fax to the Company
with a specific request to receive a verbal
response during the shareholder meeting and have
this attached to the respective minutes;
he requests additional information in order to be
able to cast a more informed vote;
he declares that he has not received a written
response to the questions he sent by fax;
he would like to know how many directors there are
on the boards of subsidiary and associate companies
and, similarly, how many regular statutory auditors
there are at those companies;
he asks to know the overall cost of fees paid by
the Group to the directors, statutory auditors and
top management in 2012;
19
he notes that in Canada, the United Kingdom,
Holland, Belgium and Luxembourg there are about 47
companies for which he would like to know the
turnover for goods they produced in 2012;
he asks, with regard to the agricultural and
construction equipment sector, why the Group has
expressed, immediately after the well thought out
reorganization, the need to make changes in
position, company purposes and ownership structure;
he states that, although these considerations are
limited to the agricultural and construction
equipment sector, they can be extended to the whole
Group, with just a few exceptions;
he has some perplexity with regard to the
surprising net result, since there are often
“jumps” of hundreds of millions, and he provides
some examples:
he notes that in "Highlights for 2012" there is
reference to Case New Holland Construction
Equipment India Private Limited, which is
controlled by New Holland Fiat India Private
Limited, and through others, on December 31, 2012;
he would like to know what advantage was obtained
by transferring the direct control of this company
to CNH America LLC during the year and what the
20
tenfold increase in profit is due to; he also would
like to know how many employees Case New Holland
Construction Equipment India Private Limited has;
he points out that in the same document reference
is made to New Holland Kobelco Construction
Machinery S.p.A., which is controlled by CNH Italia
S.p.A., which is in turn controlled by CNH
Osterreich GMBH, and he would like to know what
advantage was obtained by having this intermediate
holing in Austria, what business CNH Italia S.p.A.
carries out and how many employees New Holland
Kobelco Construction Machinery S.p.A. has;
he points out that, in the same document, Ros Case
Mash is mentioned, despite the fact that its
cancellation has been talked about for two years,
and asks whether the handover has been completed
and why the latest financial figures are not
reported for 2012 when they were reported for 2011;
he asks that the company’s real estate assets be
quantified if it has any;
he states that, with regard to trucks and
commercial vehicles and as clarification of the
question contained in his fax of April 5, 2013 with
regard to the transfer of equity interests held by
Iveco Partecipazioni Finanziarie S.r.l. during
21
2012, that the reference relates to the transfer of
Iveco S.p.A. and Iveco International Trade Finance
to Iveco FS Holding Limited.
Shareholder Giuseppe MARGARONE
as every year, feels the duty to send his regards
to Mr. MARCHIONNE and the other board members;
he notes that he has always had the utmost
admiration for Mr. MARCHIONNE and the rest of the
management and states that he has always believed
in FIAT and in the future of the Italian auto
industry but fears that he can no longer be so
optimistic;
he explains that prior to last year’s shareholder
meeting he purchased 1,000 FIAT shares and that a
few days ago he sold 10,000;
he says he feels like the "emperor with no clothes"
unless he has FIAT and FIAT INDUSTRIAL shares;
he says that he came to Turin when he was 18 to
study at the Polytechnic, where he studied
mechanical engineering with an automotive
specialization, and that he has always had a
passion for the automotive sector and an interest
in FIAT and even felt obliged to do something for
FIAT but now feels disappointed;
he says that he asked to speak with one of the
22
managers and asks Mr. MARCHIONNNE whether the e-
mails that he receives are actually given to him or
automatically deleted, because he sent one without
receiving any response; it is clear that, if Mr.
MARCHIONNE had received the e-mail, he would have
asked someone to respond to it;
he believes that the 5 minutes allocated for
speeches, which don’t seem sufficient for many
people, in his opinion are sufficient;
he is pleased that the buffet has improved this
year;
he thanks Mr. PICCATTI, whom he considers a great
person;
he informs those in attendance that tomorrow he
will be at the FIAT shareholder meeting because
what is important for him is FIAT, which is
something he cannot do without;
he is disappointed that the Group has no cars that
can compete with AUDI and BMW.
The Chairman
- responds to Franco BORLENGHI that:
as mentioned in the opening speech, the Company
expects that market conditions will remain solid
for all sectors, particularly for CNH; the Company
has revised its targets upwards for 2013, revenues
23
are due to increase by about 5% with trading margin
between 8.3% and 8.5% and net industrial debt
between €1.1 and €1.4 billion; these targets were
set in January 2013 at the time the Company issued
its 2012 results and will be revised at the end of
April, when first quarter 2013 results are
published;
the merger with the subsidiary Case New Holland
will be addressed at the extraordinary general
meeting and work necessary to complete the
transaction continues;
- responds to Jutta SPERBER that:
to improve the quality of its products, Case New
Holland has an active commitment to Research &
Development, as shown by the high level of capital
invested; in addition, testing of finished products
has been intensified, both at plants post-assembly
and in the field prior to the launch of a new
product;
- responds to Marco Geremia Carlo BAVA that:
the stock grants are not given to pay taxes but are
instead a component of compensation for those who
receive them, who in turn are responsible for
paying the related taxes; all managers are
responsible for paying the taxes owed on their
24
compensation;
- responds to Riccardo MOLETTI that:
the NewCo is a Dutch company and the Company has
never been transferred as it has only recently been
set up;
any clarification on the merger will be provided
during the course of the general meeting of
shareholders called to vote in that regard;
- he responds again to Marco Geremia Carlo BAVA
that:
there are currently 61 employees on temporary
layoff at the CNH plant in Imola and 493 at the
IVECO IRISBUS plant in Valle Ufita; IVECO and
IRISBUS are currently applying an extraordinary
layoff fund for company crisis, due to closure of
the business; in terms of the use of the ordinary
temporary layoff benefit scheme, production
stoppages are planned to allow for alignment
between production volumes and market demand;
the average yield on invested liquidity in 2012 was
2.2%, while the weighted average cost of funding
was 6.2%; the Group invests excess liquidity in
accordance with specific policies relating to
diversification and typically very short-term, with
banking counterparties selected on the basis of
25
their rating and their relation with the Group with
the principal objective of protecting capital;
- responds to Giuseppe MARGARONE that:
e-mails addressed to him are received if the
address is correct;
- responds to Corrado RADAELLI that:
information on fees paid in 2012 to directors,
statutory auditors and top management is provided
in the 2012 Compensation Report which was prepared
in accordance with Article 123-ter of Legislative
Decree 58/98 and in conformity with attachment A,
tables 7-bis and 7-ter, of Consob Regulation 11971
of May 14, 1999 and published on the website
www.fiatindustrial.com;
the changes in position, company purposes and
ownership structure are made where necessary to
optimize the ownership structure of the Group;
Shareholder Marco Geremia Carlo BAVA
asks that it be reflected in the minutes that board
member John Philip ELKANN left the shareholder
meeting.
The Chairman
- continues in his response to Corrado RADAELLI
that:
the Group has about 250 companies, of which 22 are
26
in Italy, 17 subsidiaries and 5 associates, and 225
abroad, 210 subsidiaries and 15 associates; these
companies have a board consisting, on average, of 3
to 5 board members and operating companies in Italy
all have a board of statutory auditors consisting
of three regular auditors and two alternate
auditors;
CNH Italia S.p.A.’s activities consist of the
production, development and marketing of
agricultural products and construction equipment;
2012 turnover for goods produced in Belgium was
€224.6 million, of which €110.6 million for CNH,
€113 million for IVECO and €0.9 million for FPT
MOTORI; in Luxembourg it was €7.7 million, of which
€1.2 million for CNH, €5.1 million for IVECO and
€1.3 million for FPT MOTORI; in Holland it was
€182.9 million, of which €98.6 million for CNH,
€78.6 million for IVECO and €5.6 million for FPT
MOTORI; in the UK, it was €753.7 million, of which
€398.3 million for CNH, €326.5 million for IVECO
and €28.8 million for FPT MOTORI; in Canada, it was
€1,424 million, of which €1,423.8 million for CNH
and €0.2 million for IVECO;
Kobelco Construction Machinery has 592 employees.
The Chairman then proceeds with the responses.
27
Marco Geremia Carlo BAVA
complains about not having received a response on
the Civis problem and wants to know what the status
is in that regard;
he says he asked a question relating to
compensation, which is always very difficult to
find in the documentation, and points out that he
will put it on his website, so that everyone
wanting to find it can do so easily;
he notes that the documentation states: "Under the
stock option plan of January 2012, Mr. MARCHIONNE
received 4 million ordinary shares from FIAT. In
February 2012, to cover a portion of the associated
taxes, Mr. MARCHIONNE sold 980,000 ordinary
shares...";
he asks again how people who do not have stock
grants to sell can cover their own taxes
liabilities;
he proposes that Mr. MARCHIONNE and the entire
board forego their compensation, by making a
donation to the charity CARITAS, considering this
to be the only way for them to not end up as greedy
rich people, and considering they are responsible
for at least 500 people on temporary layoffs.
The shareholder Giovanni ANTOLINI
28
expresses his disappointment about the way
shareholder meetings are conducted;
he is of the opinion that it is not possible to
continue in this manner and the regulations need to
be changed;
he believes that the interests of a shareholder and
a director are proportional to the capital invested
and considers it unacceptable that people acquire
one share to come to shareholder meetings and talk
about problems that have nothing to do with the
performance of the Company;
he considers it would be correct that the right to
speak is proportional to the amount of capital
invested;
he maintains that if there is a group which has
invested significant amounts of capital, it has the
right to say more things and make more
contributions to shareholder meetings and that if
there is a shareholder that has invested all of his
savings in the Company, that shareholder be
involved in the management of the Company and have
the duty to say what isn’t right, while a
shareholder with only a few shares that comes to
shareholder meetings to discuss trade union issues
is merely disturbing proceedings; he does not
29
consider proceedings democratic.
The Chairman declares that he considers this to be
an interesting concept.
The shareholder Corrado RADAELLI
considers it a risk to adopt the principle
according to which people who have invested more
money can speak for longer, in that this would mean
that only large shareholders could speak;
he criticizes the fact that he has not received a
response, either written or verbal, to the
questions he sent by fax and fears that even this
aspect is left to the will of the directors or
other parties, and complains about the fact that
the shareholders are not allowed to speak;
he declares that he will vote against the motion
not so much for the results in the financial
statements, but because of the above conduct;
he asks all shareholders, particularly minority
shareholders, to do the same to protest against a
behavior that suffocates any expression which is
not in line with the will of the majority; he is of
the opinion that the individual shareholder is in
grave difficulty;
he asks for information about the fax he sent to
the Company.
30
Shareholder Giuseppe MARGARONE
asks shareholders to protect the interests of small
shareholders and to ensure that those who come to
shareholder meetings demonstrate, in order to be
listened to, proper attention to the positive
performance of FIAT share;
he explains that, although he currently has 7 FIAT
INDUSTRIAL shares and 1 or 2 FIAT shares, he took
part anyway even though a friend of his, that has
60,000 or 70,000 FIAT shares, did not come because
he considered it a waste of time;
he states that nobody can be prevented from
speaking, since this would be unfair and
undemocratic, but he asks that a means be found to
ensure that those who do take part in shareholder
meetings have a real interest in it, as he claims
he has.
The Chairman provides some additional responses to
the questions that were asked before and explains
to shareholder RADAELLI that:
the Ros Cash Mash cancellation has not yet taken
place, although the company is no longer operating;
no questions were received by the deadline and
therefore there is no response;
- explains to shareholder BAVA that:
31
a technical solution is being sought to the Civis
supply, in collaboration with the client.
With no other speakers on the list, the Chairman
declares the discussion closed and proceeds to the
vote after pointing out that the televoting system
will be used following the instructions projected
on the screen.
He then passes to a vote on the motions for
approval of the financial statements at 31 December
2012, allocation of profit for the financial year
and distribution of dividends. He notes that voting
is open and those present can now press the
appropriate button:
. F to vote in favor
. A to abstain
. C to vote against.
He explains that, after checking the display to
verify the vote selected is correct, it is
necessary to press the OK button and verify on the
display screen that the vote has been recorded.
He also requests that proxies or trustees needing
to cast multiple votes head to the assisted voting
table.
Shareholder Marco Geremia Carlo BAVA
asks that it be reflected in the minutes that he is
32
voting against also because the motion calls for
reserves to be distributed.
At the end of the vote the Chairman asks whether
everyone has voted and confirms the result.
The motion for approval of the financial statements
at 31 December 2012, allocation of profit for the
year and distribution of dividends are approved by
a majority with:
votes in favor 786,306,700
votes against 36
abstentions 8,824
shares not voted 2,205,518.
Details of who voted in favor, against, or
abstained or did not vote, with the respective
number of shares, are provided in the list of
participants (attachment "E").
The Chairman then passes to the vote on the motion
put forward by shareholder Marco Geremia Carlo BAVA
to promote the liability action pursuant to Article
2393 of the Civil Code as indicated by the
shareholder.
Shareholder Marco Geremia Carlo BAVA
declares that the liability action must be
discussed and maintains that he should have the
opportunity to present his motion before it is
33
voted on.
The Chairman proceeds to the vote after pointing
out that the televoting system will be used
following the instructions projected on the screen.
Shareholder Marco Geremia Carlo BAVA
asks that it be recorded in the minutes that he has
not been given the opportunity to illustrate his
proposal.
The Chairman declares the voting open and reminds
shareholders that they can press button:
. F for those in favor of the liability action
. A to abstain
. C for those against the liability action.
He explains that, after checking the display to
verify the vote selected is correct, it is
necessary to press the OK button and verify on the
display screen that the vote has been recorded.
He also requests that proxies or trustees needing
to cast multiple votes head to the assisted voting
table.
The shareholder Marco Geremia Carlo BAVA
asks once again that it be recorded in the minutes
that he has not been given an opportunity to
34
expound on his proposal.
At the end of the vote the Chairman confirms that
the motion to promote the liability action pursuant
to Article 2393 of the Civil Code is rejected with:
Votes against 788.326.522
Votes for 150,726
Abstentions 43,782.
The vote is followed by enthusiastic applause from
shareholders.
Details of who voted in favor, against, or
abstained or did not vote, with the respective
number of shares, are provided in the list of
participants (attachment "E").
The Chairman then puts to the vote Section One of
the Compensation Report specifying that the voting
is open and that it is therefore possible to press
the button:
. F to vote in favor
. A to abstain
. C to vote against.
He explains that, after checking the display to
verify the vote selected is correct, it is
necessary to press the OK button and verify on the
display screen that the vote has been recorded.
He also requests that proxies or trustees needing
35
to cast multiple votes head to the assisted voting
table.
Shareholder Marco Geremia Carlo BAVA
declares that he is against the motion in general,
but also because the shares granted have been sold
for tax reasons and because it enables the Chairman
to pay his taxes with the Company’s money;
he notes that he voted against approval of the
financial statements in light of "Mr. MARCHIONNE’s
marvellous management" and adds that he considers
the compensation reported to be amoral as there are
people who commit suicide because they can’t cover
their living costs.
At the end of the vote, the Chairman asks whether
everyone has voted and confirms that Section One of
the Compensation Report is approved by majority
with:
votes in favor 475,682,855
votes against 297,619,617
abstentions 11,543,881
shares not voted 3,677,719.
Details of who voted in favor, against, or
abstained or did not vote, with the respective
number of shares, are provided in the list of
36
participants (attachment "E").
On point
2. Election of Board of Statutory Auditors:
a) Election of Regular Auditors, Alternate
Auditors and Chairman;
b) Compensation for Statutory Auditors,
the Chairman notes that, as indicated in the report
of directors which was distributed to those present
(attachment "C") this item relates to the election
of the board of statutory auditors.
He confirms that, along with the additional
information required under Article 17 of the By-
laws, two lists of candidates were deposited:
. the first, identified as list no. 1, was
presented by EXOR S.p.A., which owns 30.013% of
total share capital,
. the second, identified as list no. 2, was
presented by a group of Italian and international
fund managers and institutional investors, together
holding 1.012% of total share capital.
He then noted that the list presented by EXOR
contains the following candidates:
for the office of regular auditor
1. Paolo PICCATTI
2. Nicoletta PARACCHINI
37
3. Lucio PASQUINI
for alternate auditor
1. Riccardo ROTA
2. Giovanna CAMPANINI
3. Giorgio CAVALITTO,
while the list presented by a group of Italian and
international fund managers and institutional
investors contains the following candidates:
for the office of regular auditor
Claudia MEZZABOTTA
For the office of alternate auditor
Giulia PUSTERLA.
He notes that both lists, with the respective
attachments, were made publicly available in
accordance with the requirements of law and are
available from the secretary’s table.
He adds that a summary sheet and the CVs of all
candidates were circulated along with a list of
positions as director or statutory auditor held by
those individuals at other companies (attachment
"D").
With regard to the annual compensation for the
board of statutory auditors, the Chairman points
out that in the abovementioned directors’ report, a
proposal is made to set it at €85,000 for the
38
Chairman and €55,000 for the other regular
auditors.
The Chairman then passes to the second item on the
agenda and reminds those in attendance that
speeches must be concise and relevant and that
speakers must remain within the time limit of 5
minutes – which, as explained already, must also
include any voting declarations – and an
additional 2 minutes for responses to the answers
provided.
He then reminds everyone that when the time has
expired, the podium will pass to the next
shareholder in order and that a brief tone will be
sounded 1 minute before a speaker’s time expires.
A summary is provided below.
Shareholder Marco Geremia Carlo BAVA
appeals to the new statutory auditors since he
believes the FIAT situation to be very serious;
he is of the opinion that the current board lacks a
sense of realism, especially in terms of
compensation;
he is of the opinion that if the board included Mr.
LANDINI among its members, it would have a better
understanding of the product and industrial
production;
39
he presents the statutory auditors with a series of
complaints pursuant to Article 2408 of the Civil
Code, since he notes how prompt they are in
responding;
he states that these complaints will represent for
him an official record as will the ruling,
described above, which relates to him;
he reports to the board of statutory auditors,
pursuant to Article 2408 of the Civil Code, the use
of the company ORIONE as a private police force;
he asks that the board of statutory auditors verify
whether there are any breaches of Article 134 of
the Law on Public Safety and Article 347 of the
Criminal Code, since he is convinced that the
evidence of the actions of the company ORIONE
against him have already been provided to the board
of statutory auditors and have been ”glossed over”
by the latter;
he notes that, addressing the members of the board
and Mr. MARCHIONNE, the calculation of net
financial position is not correct and that it is
the same as net debt and points out that FIAT
changes this for international rating purposes,
subtracting loans which are commercial and not
financial as they are mainly to support the sales
40
network and commercial sales;
he asks that the debt position and related
liquidity be verified, in that all the debt ended
up with FIAT INDUSTRIAL and the liquidity remained
with FIAT;
he notes that debt increased but net financial
position did not increase as much as it did for
FIAT and he confirms the underlying concept that it
makes no sense to pay for 6.2% for liquidity and
reinvest at 2.2%;
he is of the opinion that the only justification
which can be given is that this helps the
management of the Company, although he believes
that the Company’s internal rate of return is not
6.2%;
he hopes for ostracism of the city’s powerful and
recounts that when he was at university he would
speak of his industrial plan and always said that
the greatest constraint of the industrial plan is
the internal rate of return which must be equal to
or higher than the average cost of debt.
Shareholder Giovanni ANTOLINI
reports that his comments are mainly constructive
and concern changes to the law that are necessary
in relation to elections of the board of directors
41
and board of statutory auditors;
he notes the presence of the Honorable Mr.
BOMBASSEI and asks him to report in Parliament the
need to establish a board of directors and board of
statutory auditors that is adequate to the task of
controlling the Company;
he believes that the situation relating to the
election of the board of statutory auditors is
simple, since on the one hand there is a majority
shareholder, EXOR, and on the other there is a
group of individual shareholders, who by law
appoint the Chairman;
he notes that this is of interest for a group of
Italian or international mutual funds only, because
the individual shareholders cannot reach the
necessary percentages to elect a member of the
board of statutory auditors;
he declares that, with this observation, he would
like Parliament to reflect on the issue and hopes
for a change;
he refers to the system of "female quotas", which
he considers to be somewhat correlated to the
previous issue because it requires that the board
of directors have a certain number of women and
that this will not be valid unless the percentage
42
of female representation required by law is
reached;
he considers the system of “female quotas” to be
fair in politics but not in a company where
specific skills are necessary;
he believes that a competent woman, with shares and
interests in a certain company, can be appointed as
a board member, but he does not believe that this
system should be applied to a position with
remuneration of €55,000;
he says that he has nothing against female board
members as long as they have a genuine interest in
the Company and can contribute to the management of
the company.
Shareholder Marco Fabrizio ZABARINI
begins by expressing an objection to the conduct of
FIAT INDUSTRIAL which in 2012 closed the CNH plant
in Imola despite the fact that it was working very
well;
he considers this closure to be a mistake because,
with the recovery deriving from the reconstruction
after the earthquake, the company could have held
on to its human capital instead of throwing away
its significant technical know-how;
he assumes that the Imola workers could have
43
acquired a vehicle or a tractor for individuals
owning agricultural land;
he believes a major opportunity was wasted to
redistribute work between plants and keep potential
purchasers of Fiat Industrial S.p.A. and Fiat
S.p.A. products on the payroll;
he is of the opinion that at the FIAT plant in
Pomigliano Mr. MARCHIONNE, as CEO, chose a
different route, which was both difficult and
brave, but prescient from the perspective of the
business and he invites him to review his decisions
and apply the same choices at CNH in Imola;
he believes that the choice of producing in Italy
for the export market and maintaining a high degree
of technical know-how, which is the result of years
of work, can also be done for FIAT INDUSTRIAL;
he believes that in the future the Company will not
be loved in Emilia Romagna;
he fears that there will also be repercussions on
the sale of cars in that wealthy region which, in
light of the natural disaster it suffered with the
earthquake, could experience a recovery sooner than
other Italian regions in light of the
reconstruction work following the earthquake;
he asserts that from a business perspective it does
44
not make sense to close CNH in Imola because it
could compromise the business of Fiat Industrial
S.p.A. and even Fiat S.p.A. in Emilia Romagna,
precisely at a time when these companies could
benefit from a false step by Europe, under pressure
from Germany, to tax current accounts in Cyprus
above €100,000 at a rate of 37.50%;
he considers the motive for this robbery is to
guarantee the approximate €5.8 billion exposure of
German banks to Cyprus;
he says that a significant portion of these
billions belonged to citizens of the Russian
Federation;
he believes that the Russian government, which is
extremely irritated by this fact, could facilitate
Fiat S.p.A.’s entrance into the Russian market by
offering, in addition to the automotive market,
capital and promote the entrance of FIAT INDUSTRIAL
into the Russian Federation;
he believes that FIAT INDUSTRIAL, along with FIAT,
could do some very fruitful things for itself and
to appease the Russian government, in business
terms, like activating in Italy an effective anti-
German campaign in the media and, thanks to the
activism which the employees could transmit at a
45
grass roots level;
he believes in fact that, despite this now being
denied, it will be Italy’s turn after Cyprus, with
the current accounts of its companies robbed to
ensure that they will go bankrupt so that they can
buy the best companies at rock-bottom prices,
creating unemployment and social unrest;
he believes that the Italian people should be
reminded that the higher taxes they are paying are
used to cover exposure of German banks towards
Greece and the European Financial Stability
Facility with an initial value of €40 billion,
making it exceed the ceiling of €2,000 billion, and
the contribution of at least €40 billion per year
was rubber-stamped by the government before MONTI
because of the fiscal pact imposed by Germany;
he supports the opportunity of promoting a campaign
to boycott German products, and principally motor
vehicles, commercial vehicles, trucks, agricultural
machines and construction equipment;
he proposes to the Chairman to implement the plan
agreement between FIAT and the Berlusconi
Government of December 5, 2002, integrating this
with the creation on the ex ALFA ROMEO area of an
office of the technical management of FIAT
46
INDUSTRIAL of Turin, with calculations department,
to be used potentially along with Fiat S.p.A., as
support for the design of engines for trucks, and
remembers that in the past ALFA also produced this
type of engines with excellent results for the
army, and platforms for trucks, agricultural
machines and heavy equipment;
he is of the opinion that with a calculation
department it is possible to design everything,
like boats, ships, trains, aircraft and recommends,
if this is indeed created, to exploit the six month
promotional opportunity that the forthcoming Milan
Expo will offer.
The Chairman
thanks the shareholder ZABARINI for the suggestions
provided;
he states that the questions of the shareholder
BAVA will not be answered because they are not
relevant to the agenda which relates to the
election of the board of statutory auditors.
He then proceeds with the responses.
Shareholder Marco Geremia Carlo BAVA
addresses the board of statutory auditors because
he feels it correct to give information to both the
incoming and outgoing auditors;
47
he points out that he has already said that even
though Mr. MARCHIONNE has speeches written for him
in the Piedmontese dialect this does not make him
Piedmontese;
he believes that this is an example of his
marvellous management, with regard to which he once
again invites the board of statutory auditors to
investigate because it is required to do so by law,
and because it has great powers which it often does
not use to the full and he would like to see them
being more independent in this regard;
he presents the board of statutory auditors two
reports pursuant to Article 2408 of the Civil Code:
firstly he remembers having spoken about China with
Mr. Giovanni AGNELLI and that the latter had
informed him that China was the most corrupt
country in the world and he invites the board of
statutory auditors to investigate whether the
Company ever paid bribes to find work in China; he
proposes an embargo towards China, Japan and the
U.S. who still have the death penalty which he
considers to be legalized murder;
secondly, he would like to know whether
contributions were made to the election campaigns
of OBAMA and MONTI, as he does not consider it
48
acceptable that FIAT should align itself
politically with OBAMA and MONTI, who did not even
remove IRAP, the tax which penalizes Italian
competitiveness, causing delocalization to foreign
countries and fueling regional waste.
Shareholder Corrado RADAELLI
points out, in relation to the statement that there
would be numerous speakers, there have actually
been a total of seven and the number cannot be used
as an excuse to reduce the time of the individual
speeches themselves.
With no other speakers on the list, the Chairman
declares the discussion closed and proceeds to the
vote after pointing out that the televoting system
will be used following the instructions projected
on the screen.
He then puts to the vote the election of the
statutory auditors with the vote on the list as
envisaged by Article 17 of the By-laws on the basis
of which:
- from the list that obtains the highest number of
votes, 2 regular auditors and 2 alternate auditors
will be elected,
- from the additional list the third regular
49
auditor, who will chair the board of statutory
auditors, and the third alternate auditor, will be
elected.
After having gone over the composition of the lists
once again, the Chairman declares that the voting
is open and that it is therefore possible to press
the button:
. 1 to vote in favor of list 1
. 2 to vote in favor of list 2.
He explains that, after checking the display to
verify the vote selected is correct, it is
necessary to press the OK button and verify on the
display screen that the vote has been recorded.
He also requests that proxies or trustees needing
to cast multiple votes head to the assisted voting
table.
He reminds everyone that, pursuant to Article 9.5
of Procedures for General Meetings, those not
voting in favor of either list will be considered
to have abstained.
Shareholder Marco Geremia Carlo BAVA
declares that he does not intend to vote and
therefore he will be considered to have abstained
as he is waiting for the response to his complaint
50
pursuant to Article 2408 of the Civil Code.
At the end of the vote, the Chairman confirms the
following result:
votes in favor of list no. 1 455,439,934
votes in favor of list no. 2 332,785,955
abstentions 8,332.
Details of who voted in favor, against, or
abstained or did not vote, with the respective
number of shares, are provided in the list of
participants (attachment "E").
He then confirms that the board of statutory
auditors for the financial years 2013, 2014 and
2015, with term of office expiring on the date of
the general meeting called for the approval of the
2015 financial statements, is composed of:
Claudia MEZZABOTTA, born in Fano (PS) on 3 February
1970, taxpayer code MZZCLD70B43D488M, regular
auditor – chairman,
Paolo PICCATTI, born in Turin on 18 June 1957,
taxpayer code PCCPLA57H18L219U, regular auditor,
Nicoletta PARACCHINI, born in Turin on 7 March
1962, taxpayer code PRCNLT62C47L219M, regular
auditor,
Riccardo ROTA, born in Turin on 20 December 1945,
taxpayer code RTORCR45T20L219Q, alternate auditor,
51
Giovanna CAMPANINI, born in Milan on 27 May 1963,
taxpayer code CMPGNN63E67F205C, alternate auditor,
Giulia PUSTERLA, born in Como on 12 February 1960,
taxpayer code PSTGLI60B52C933H, alternate auditor,
all domiciled for the purpose of their respective
offices at Via Nizza 250, Turin, satisfying the
requirements of law and the By-laws, and Italian
citizens,
and that the composition of this body is in
conformity with the applicable legislation relating
to gender diversity.
The Chairman then puts to the vote the motion that
annual compensation for the statutory auditors be
set at €85,000 for the chairman and €55,000 for the
other regular auditors, specifying that the vote is
open and it is therefore possible to press the
button:
. F to vote in favor
. A to abstain
. C to vote against.
He explains that, after checking the display to
verify the vote selected is correct, it is
necessary to press the OK button and verify on the
display screen that the vote has been recorded.
He also requests that proxies or trustees needing
52
to cast multiple votes head to the assisted voting
table.
Shareholder Marco Geremia Carlo BAVA
declares that he will abstain from the vote for the
reason given in relation to the previous vote.
At the end of the vote the Chairman asks whether
everyone has voted and verifies that the above
proposal was approved by a majority with:
votes in favor 769,880,559
votes against 1,077,114
abstentions 10,069,697
not voting 7,211,365.
Details of who voted in favor, against, or
abstained or did not vote, with the respective
number of shares, are provided in the list of
participants (attachment "E").
Since no items remain on the agenda, the Chairman
declares the meeting closed at about 1.10 p.m.
The following attachments form an integral and
substantive part of the minutes:
. as Attachment "A", the text of the address from
the Chairman,
. as Attachment "B", the report of directors
pertaining to Item 1.B on the agenda,
. as attachment "C", the report of directors
53
pertaining to the election of the board of
statutory auditors,
. as Attachment "D", the summary list and CVs of
the candidates for election to the board of
statutory auditors and the lists of offices held by
those individuals at other companies,
. as Attachment "E", the list of shareholders
participating at the meeting, directly or by proxy,
with an indication of the respective number of
shares held and details, for each vote, of votes in
favor, against, abstentions or no votes. For the
election of the statutory auditors, voting details
report who voted in favor of list 1, in favor of
list 2 or, not having voted for either list, those
considered to have abstained.
Chairman
(Sergio MARCHIONNE)
Secretary
(Ettore MORONE)
2
In its second year of activity, Fiat Industrial improved results once again and met all financial targets. Revenues were up 6.2% over the prior year to €25.8 billion. There was a double-digit increase in trading profit to €2.1 billion and trading margin increased 1.2 percentage points to 8.1%, driven by the performance of CNH and FPT Industrial. Net profit was 31% higher at €921 million.
Net industrial debt increased by approximately €400 million. Cash generation from operating activities was strong. However, it was more than offset by investment in expanded production capacity for CNH and engine emissions compliance programs. In addition, more than €400 million in dividends were distributed during the year, including approximately €200 million to the minority shareholders of CNH Global N.V. Available liquidity at year end totaled €6.2 billion, including €1.6 billion in undrawn committed facilities.
3
In March, the rating agency Standard & Poor’s raised its outlook on Fiat Industrial S.p.A. from negative to stable and confirmed a long-term rating of “BB+” and short-term rating of “B”. In July, the European Investment Bank gave Fiat Industrial €350 million in funding to support research and development projects. Those projects – to be carried out at five of the Group’s research centers, the majority located in Italy – will be focused on improving the energy efficiency of products and achieving reductions in CO2 emissions. On the basis of the reported results for 2012, the Board of Directors is recommending a total dividend of approximately €275 million, which corresponds to 22.5 euro cents per share.
4
This slide shows the contribution made by each business to the increase in revenues and trading profit. Strong top-line growth for CNH – driven primarily by the performance of the Agricultural Equipment business – more than compensated for weaker trading conditions in other businesses. At trading profit level, CNH and FPT Industrial posted strong gains, while Iveco achieved a modest improvement in trading margin despite the decline in unit volumes delivered.
5
CNH posted revenues of €16.1 billion for the year, representing an increase of 15.5% over 2011. By region, 44% of revenues were generated in North America, 31% in Europe, Africa, the Middle East and the Commonwealth of Independent States, 15% in Latin America, and 10% in Asia Pacific. Net sales for the Agricultural Equipment segment were up 20% over the prior year to €12.2 billion, with solid trading conditions in all regions. Net sales for the Construction Equipment segment were up 6% for the year, to approximately €3 billion, with the benefit of a modest industry recovery in North America not fully offsetting the continued slowdown in demand in other regions. CNH posted a trading profit of €1.6 billion, an increase of 36% over 2011, with full-year trading margin improving to 9.8%. That result was driven by higher volumes, a more favorable product mix, improved net pricing and purchasing efficiencies. Spending on R&D continues to be high as result of investment in new product development and emissions compliance programs.
6
In 2012, worldwide agricultural equipment industry demand was in line with the prior year.
For tractors, demand was flat overall, but higher in the Americas. For combines, demand grew 3% over the prior year, largely on the back of the positive performance in Europe. Worldwide agricultural equipment market share performance was in line with the market for both tractors and combines.
For 2013, we expect the market to be in line with 2012 levels or slightly higher.
7
Global construction equipment industry unit sales were down 6% over the prior year, primarily due to the market decline in Asia-Pacific, where CNH does not, however, have a particularly significant presence. CNH gained market share in Latin America in both the light and heavy segments and performed in line with the industry in other regions. For 2013, we expect the market, in both segments, to perform in the range from flat up to a 5% increase.
8
CNH continued to update its product range with a number of new launches, particularly in European and Latin American markets, and it received numerous recognitions and awards at the international level for the technological innovation, fuel efficiency and enhanced productivity of new models. It also expanded the offering of products that meet the strictest emissions standards in Europe and North America.
9
In addition, we undertook a number of strategic initiatives during the year to further strengthen the global presence of our Agricultural Equipment business. In China, we are increasing production capacity with three new plants:
- One in Harbin in the north-east, due to be completed in 2014, that will produce high horsepower tractors, combine harvesters and other advanced machinery
- A second plant in the north-west of the country, already completed, will assemble cotton pickers and serve as a parts and service center. Production at that facility is expected to commence toward the middle of this year
- A third plant located in the south-east, to be completed during the second quarter, will assemble sugar cane harvesters
In Argentina, we have completed expansion of the facility in Cordoba for local production of combines and special tractors. That facility will be fully operational by the end of the second quarter of this year. We have also launched initiatives in India to increase capacity at the Noida plant and to establish a new facility in Pune that will produce harvesting equipment. The Pune facility will be completed within the next couple of years.
10
For Iveco, full-year revenues totaled €8.9 billion, representing a 6.7% decrease over the prior year. Volume declines in Europe and weaker demand in Latin America were partially offset by a more favorable product mix. Iveco delivered more than 137,000 vehicles during the year, representing an 11% year-over-year decrease. Volumes were lower for all segments except special vehicles. Trading profit totaled €469 million for the year, with trading margin improving slightly to 5.3%, as volume declines and pricing pressures were almost entirely offset by cost efficiencies and an improvement in the result for Financial Services.
11
Industry demand was down in all product segments in both Western Europe and Latin America, with declines of 7.4% and 14.3% respectively. For 2013, we expect the truck market will remain steady in Western Europe, with a potential modest recovery in the heavy segment being offset by a decline in the light segment. In Latin America, a recovery is expected across markets but driven, in particular, by the Brazilian economy. Iveco posted an 8% decline in new orders over the prior year. However, there were initial signs of a recovery in the fourth quarter, with order intake increasing 10% over the prior year to a level that represented the best fourth quarter in the past five years.
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Iveco’s market share in Western Europe was 11.3%, a decline of 0.8 percentage points over 2011 primarily attributable to an unfavorable market mix. However, in the light segment – which was affected by the crisis in the construction sector and the continued shift in demand toward car-based models – market share improved from the second quarter onward. Share in the medium segment reflected negative performance in the U.K., which more than offset results in Italy where share increased 6.3 percentage points over the prior year. In the heavy segment, Iveco posted a 7.5% share, with gains in all markets except France. In Latin America, Iveco had an 11.6% share of the market with particularly positive results in Argentina. We maintained our leadership position in the light segment in Brazil with a 25.6% share for the year.
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New product launches continued in all regions with recognition being received at the international level. In Europe, we launched the new Stralis Hi-Way, which was named “International Truck of the Year 2013” at the IAA in Hanover. In Brazil, the new Tector Attack won the “AutoData Award” for best vehicle in the medium segment both for overall quality as well as performance specifications. In China, the new light truck produced by Naveco – Iveco’s joint venture with Nanjing Automotive Corporation – was named “Truck of the Year 2013”.
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One of the Group’s major accomplishments is the market position achieved by Iveco in China in recent years through its joint ventures. In 2012, the Chinese truck market contracted by 8.7% overall, although performance varied significantly by segment. The minibus segment, where we compete with the Daily, registered a 5% increase and demand in the light segment was substantially stable. The heavy segment, by contrast, was down 28% for the year. In terms of market share, Iveco gained more than half a percentage point over the prior year to 5.2%. Sales increased 3.3% to 148,000 units and the result from investments for the Chinese joint ventures was €2.5 million.
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FPT Industrial also made a positive contribution to results. Despite revenues being down over the prior year on the back of lower volumes, trading profit was 33% higher at €142 million. Trading margin also improved 1.5 percentage points to 4.8%. The improvement reflects the absence of one-off costs recognized in 2011 relating to production start-ups, as well as efficiency gains achieved during the year.
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FPT Industrial continued to focus its R&D activities on development of solutions to improve efficiency and environmental performance with completion and launch of several new products during the year. We introduced the patented High-Efficiency SCR technology which offers significant reductions in operating costs and emissions – bringing products into line with future CO2 emissions standards a year ahead of introduction – while maintaining top level performance. At the IAA in Hanover, we presented the first Euro VI CNG engine for buses and other on-road vehicles. FPT Industrial’s technical know-how and continued development of the product range, in all regions, provides the Group a significant competitive advantage.
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Several important steps were also taken to further strengthen the market position of the business. An agreement was signed with Ford to supply Cursor 10 engines for its new range of heavy trucks in Europe and Latin America. In China, we signed an agreement with the metropolitan transport authority in Beijing to supply 180 CNG engines for use on commuter buses. We signed a letter of intent with VDL Bus & Coach, one of the leading bus producers in Europe, to supply Cursor 9 engines for its Euro VI range of vehicles. In North America, Vermeer will introduce the Cursor 13 engines on its off-road applications. Further support for the development of our activities in Latin America will come from the new plant in Cordoba, Argentina, which began operations in April 2012 and should reach full capacity this year. We also opened a new distribution center in Shanghai that will enable us to substantially improve delivery performance and service support in the Asia Pacific region.
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This slide shows just a few examples of the recognition received by FPT Industrial during the year. When Iveco was awarded “International Truck of the Year 2013” for the Stralis Hi-Way, FPT Industrial also received special mention for the contribution of the Cursor range of engines to the vehicle’s fuel efficiency and environmental profile. The jury credited FPT Industrial for opening a new avenue in the reduction of noxious emissions on diesel engines. FPT Industrial’s contribution was also a determining factor in the “Best of Specialized” 2013 awarded to one of New Holland’s tractor models in Europe.
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Our expectation for 2013 is continued solid trading conditions for all sectors, especially CNH. Fiat Industrial is targeting improved results for 2013 with:
• revenues up 5%
• trading margin between 8.3% and 8.5%
• and net industrial debt between €1.1 billion and €1.4 billion These targets were announced at the time we published our 2012 results and we
will be updating them at the end of April together with the announcement of our
first quarter 2013 results.
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Before concluding, I would just like to say a few words regarding what is a crucial moment for Fiat Industrial. As you know, in November Fiat Industrial and CNH signed a merger agreement that paves the way for a new corporate structure and full integration of their operating activities. The transaction, which we expect to complete during the third quarter of 2013, will be submitted for the approval of shareholders of each company at forthcoming EGMs and, accordingly, it is not included on today’s agenda. However, I want to briefly comment on the transaction today, because it represents the culmination of a lengthy simplification process initiated more than two years ago. From a technical perspective, the agreement provides for the establishment of a new company, or NewCo, into which both Fiat Industrial and CNH will be merged. Fiat Industrial shareholders will receive one NewCo share for each Fiat Industrial share held and CNH minority shareholders will receive 3.828 NewCo shares for each CNH share held. NewCo will adopt a loyalty voting structure to promote a stable shareholder base by rewarding long-term share ownership.
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From a strategic viewpoint, we consider this step vital to the future growth, simplification, autonomy and efficiency of the Group. It will lead to the creation of a fully-integrated, multinational capital goods group capable of competing at the very top of the sector. It will be one of the largest, most solid players in its peer group with an established global presence and, finally, the freedom to craft its own destiny. It will have the necessary flexibility to pursue the most advantageous strategic options and capitalize on opportunities for growth and consolidation consistent with its ambitions as a leader in the sector.
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The new organizational structure announced at the end of 2012 reflects the international profile of the Group’s businesses and will play a key role in facilitating the integration process.
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For the past two years, the new Group has met and exceeded all expectations. It has established a new course with decisiveness, efficiency and responsibility. As a truly global organization, we understand that continuous improvement and change are essential to remaining agile and being able to compete with the best in our industry. Our move forward to the full integration of Fiat Industrial and CNH is based on that approach. We are about to forge a new group with all of the opportunities and challenges that this will bring. We are confident that closer integration of the businesses through this transaction will unleash renewed vitality and opportunity for development and, in so doing, create significant value for the Group. Finally, I would like to thank all of you – all Fiat Industrial shareholders – for your support during 2012 and for remaining with us as we enter this next historic phase.
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