Stellantis NV (STLA) 2016 Q4 法說會逐字稿

Good afternoon good morning ladies and gentlemen and welcome today's Fiat Chrysler Automobiles 2016 fourth-quarter and full-year results webcast and conference call. For your information, today's conference is being recorded. At this time I would like to turn the call over to Joe Veltri, Head of FCA Global Investor Relations. Mr. Veltri please go ahead, sir

Thank you Alex and welcome to everyone who's joining us today. The presentation material for this webcast and conference call, along with the earnings release that was issued early today by the company, are both posted in the investor relations section of the FCA Group website.

Our call today is hosted by Sergio Marchionne, our Chief Executive Officer; and Richard Palmer, the Group's Chief Financial Officer. Both gentlemen will be available to answer questions after their introductory remarks.

Before we begin, I just want to point out that any forward-looking statements we might make during this call are subject to the risks and uncertainties that are mentioned in the safe harbor statement on page 2 of today's presentation. And as always, the call will be governed by that language. With that, I'll turn the call over to Sergio Marchionne.

Thanks Joe. As usual I'm going to ask Richard to do all the heavy lifting on the call, but I just want to make a couple of remarks before we start. The first is that you see from the numbers and you see in the press release, this has been a record year for FCA. But more importantly as Richard will show you, we're now 60% done with the 2014 to 2018 plan.

The most comforting thing of having delivered these results is that they're confirmation of the fact that directionally we're moving in a very methodical and very precise way towards the accomplishment of the 2018 target. When we spent a day together back in 2014 and we outlined the plan, I think it was fair to say that there was a high level of incredulity about the doability of the plan.

As we look at the 2016 results and Richard will now take you through the progress that we've made by the accomplishment of 2018, those 2018 numbers don't look as undoable as they looked then. And that's a big sign of comfort to the management team which is now fully focused on the execution of the remaining two years of the five-year plan.

We have made all the industrial decisions that need to be made to make the 2018 numbers. There's not much we can do between now and December of 2018 to change the strategic commitment that we've made with the brand development for infrastructure build and capital required to deliver those products in the marketplace.

And so, our objective here is to execute flawlessly on decisions that have been made now in the last three years, and to effectively deliver the earnings that sit in the 2018 plan. I'm not going to address the issue of diesel directly in my remarks although I'll be more than glad to answer any questions you may have after the presentation.

We are in the midst of a series of pretty intense discussions with both EPA and CARB on the certification of the 2017 models for both the Ram 1500 diesel and the Grand Cherokee diesel. I think discussions are proceeding well and I think they're a confirmation of, certainly the goodwill that's been established with the regulatory agencies now for a number of years.

And something that I expect to continue, hopefully will bring to 2017 cert to a conclusion relatively quickly and I think it will allow us to deal with both the 2014, 2015, and 2016 models of those cars in an efficient way that can hopefully be accomplished by simply reflashing the ECU. So I think we've made progress -- and obviously it's a legal matter and I'm reminded and warned by counsel not to expand comments beyond what I can talk about, but I'd be more than glad to answer any concerns you may have. And then I'll pass it on to Richard.

Thanks very much. Good morning and good afternoon to everybody, moving to page 4 I'm going to take you through the 2016 full-year performance. Our financial results, as mentioned, were another record year for FCA. We see that our guidance both on earnings and on net industrial debt.

Our full-year adjusted EBIT was EUR6.1 billion and our margins were up to 5.5% for the year, plus 130 basis points year over year. And our bet industrial debt was reduced to EUR4.6 billion from the EUR5.1 we started with at the beginning of the year.

I think on the product side, we've launched nine all new products worldwide, to six of which were sort of white space additions to our portfolio, those clearly very important thinking about our future performance in 2017. Those included Levante Giulia, Tipo in Europe, the Toro in Latin America, the fullback in Europe and the Fiat 124.

We've also completed the localization of our Jeep production, with Pernambuco and their production facility and our China JV now fully operational, from the beginning of this year. As you are aware we've been working hard on our capital structure, we did complete the Ferrari spin at the beginning of the year, seems like a lot longer ago but it was only January last.

We've eliminated the ring fencing in the US, which allowed us also to activate the second part of our revolver, getting us another EUR2.5 billion of liquidity, and we reduced the gross debt through the year by EUR3.7 billion. As we talked about on the last call, our NAFTA capacity realignment is going as scheduled. Dodge Dart and Chrysler 200 production ceased at the end of 2016, and now those plants are being realigned to produce truck and SUV. So that will allow us to continue to capitalize on the strength of Jeep and Ram and satisfy demand in those growing segments of the market.

And looking forward to 2017, we're issuing guidance which we believe shows continuing progress towards our 2018 targets. And those are net revenues up to between EUR115 billion and EUR120 billion, adjusted EBIT to over EUR7 billion, adjusted net profits over EUR3 billion, and a further reduction in net industrial debt down to less than EUR2.5 billion by the end of the year.

So a little bit more about the guidance later, but I'm moving to page 5. Here we're showing three of the key products that we are now launching into the marketplace. The Stelvio for Alfa Romeo is a second vehicle off the new platform, it was revealed in Los Angeles and is now being launched in Q1 in EMEA and will be launched in Q2 in NAFTA.

The Jeep Compass was also revealed last year in Q4 in Los Angeles, it will be sold globally and has already been launched in Latin America, and is now launching in China and in the US in the first quarter. And then the P8GV is also being launched now in NAFTA as an application on the new Pacifica minivan.

Moving to page 6 we have the financial summary. Our consolidated shipments were down although our combined shipments were basically flat and the big movements there were NAFTA was down due to the Dart and 200 being reduced in terms of fleet volumes and now ceasing production at the end of the year. That was partially offset by an improvement in our Ram performance.

Latin America was down because of the market situation. We had APAC consolidated shipments down as we move into localized production in the JV, but the JV was up 83,000 units year over year which more than compensated for the reduction on CBU export.

And then EMEA was up, driven by new product, the Tipo, the Alfa Giulia at the end of the year and also the LCV portfolio performed very well. So overall, I think it was a strong year from a commercial point of view and our transition Asia Pacific is substantially complete, so now we have a full-year of the three Jeeps in the JV in China.

Net revenues for the year were basically flat at EUR111 billion and the reduction in consolidated shipments was offset by improved mix in NAFTA, and also across the other regions and in particular also with Maserati as we launched the Levante in the second half of the year. So the improved mix was one of the major drivers of our improvement in adjusted EBIT to EUR6.1 billion from the EUR4.8 billion in the prior year, and margins as I said were up 130 basis points to 5.5%. We'll look at the main drivers in a second.

Adjusted net profit was up to EUR2.5 billion, substantially driven by the operating performance, some reduction in net financial expenses as we reduce our gross debt, which was partially offset by higher income taxes and higher tax rate because of the high contribution of US EBT. And then net industrial debt as I mentioned was down to EUR4.6 billion and notwithstanding, we used cash to reduce gross debt, we maintained our available liquidity at just short of EUR24 billion with the increase in the revolver EUR2.5 billion in the year.

Moving to page 7, you can see the contribution to the improvement in EBIT by segment. And NAFTA continues to be the main driver as it was in the prior year, although I think very importantly we're starting to see significant contributions also from EMEA and from Maserati. So NAFTA margins were up 100 basis points year over year, EMEA's adjusted EBIT improved by more than 150%, and final full-year margins were 2.5%. Maserati more than tripled its adjusted EBIT to reach a full-year margin of nearly 10%.

Moving to page 8, you can see operational driver, the key driver for the year, as I mentioned earlier, was positive mix in most all of the regions, driven by Jeep globally as well as Ram volumes in NAFTA, the launch of the Fiat Toro, and the Compass in Latin America. The Fiat Tipo launch and improved LCV performance in Europe, and these more than offset the negative volumes in NAFTA and Latin America. And obviously also Maserati showed both positive volumes and positive mix, driven by the launch of the Levante.

On the on the cost side, you can see that basically we were flat year over year with costs, notwithstanding that we did have some increase on the product cost side with the new launches and that was more than offset by purchasing savings, some help from commodity prices also. And those allowed us to continue to control our costs while launching new products. SG&A was a negative, basically as we spend money in Europe on the launches of the vehicle as I mentioned earlier and also the Levante launch for Maserati.

Moving to page 9, you can see the net industrial debt walk. Our full-year operating cash flow net of CapEx, so before any FX impacts, increased to EUR1.8 billion from EUR0.4 billion in the prior year. And the main driver of the improvement was an increase in EBITDA from EUR10 billion to EUR11.8 billion.

Working capital and changing provisions were positive but down from prior-year levels, and the reduction in volumes in NAFTA was partially offset in Q4 as we ramped up production for Toro, Levante and Giulia on the European side.

Inventory was reduced in the year as we reduced production of Dart 200 and Compass Patriot in Q4, as those parts came down for transition. So I think overall we had a good cash flow performance, we will obviously need to continue focus on the cash flow as we move into 2017 and the target to reduce our net industrial debt to below EUR2.5 billion.

Moving now to the regions on page 10, starting with NAFTA, the full-year SAR for the US was EUR17.9 million and Q4 was actually higher at EUR18.4 million. Whereas Canadian SAR was EUR1.9 million for the year and about EUR2 million for the quarter. So overall the markets were pretty flat, our US sales are also flat with the phaseout of 200 and Dart from a market share perspective being covered by Jeep and Ram sales improvements.

US days of sale, days of supply increased slightly over year end 2015, but mainly because of some of the transitions that we're managing, principally on Compass Patriot. US fleet mix started to come down as we talked about in the last quarter call, and so overall an improvement in mix as a result of those shifts allowed us to improve our overall volume and mix, notwithstanding the reduction in shipment.

Also we were very active on pricing, particularly in Canada and Mexico to try and offset the impacts of exchange as the hedges started to roll off, particularly in the second half of the year. I mentioned industrial cost improvements already and NAFTA was a very positive result for this year, and something we need to continue as we go to 2017. So overall I think the 7.4% margins up 100 basis points year over year was a good performance, and all is well for 2017.

Latin America, clearly the market continues to be very tough, industry was down 11%, with Brazil down 20% slightly offset by Argentina. We continue to be the market leader in Brazil, notwithstanding that we've been quite disciplined on the pricing side and lost some share as you can see. We held leadership in the A segment which is historically the strongest segment for the Fiat brand, and we have expanded our leadership in LCV and pickup, building on the Strada presence in the smaller pickups with the launch of the new pickup in the second half of the year.

And with Jeep coming in also from the Pernambuco plant, we have been able to get to 20% of share of the SUV segment. Overall that important contribution of positive mix from the vehicles coming out of Pernambuco help us to offset the impact of volume in the more traditional segments where Fiat played in the past and allowed us, together with some very aggressive cost actions on the cost structuring team, to get to a breakeven for the full year and improvement year over year.

Moving to Asia Pacific, the industry was up with China up 15%, our group combined sales increased by 8%, with our share flat notwithstanding that we lost volume in Australia as we continue to price to try and offset the Aussie dollar deterioration over the last few years. The Jeep brand represented 76% of our regional sales, and was up 50% year over year, driven by local production of Cherokee and Renegade. And our combined shipments, including the JV, were up 23% year over year.

So, if you look at the walk across on an adjusted EBIT, you can see the consolidated volume came down but was offset by the SG&A positive which is basically a shift of sales and marketing expenses into the JV where that activity is now managed, and then the positive impact of the JV results coming to the other line there, driving the EUR150 million improvement year over year. We get to our 2.9% margin with EUR100 million compared to the EUR52 million we made last year.

Moving on to EMEA, I think together with Maserati probably one of the best stories for the 2016 numbers we had -- we more than doubled our EBIT year over year getting to 2.5% margin for the year, and that was driven by a significant performance from the new Fiat Tipo family of products, a very strong performance from Jeep with the Renegade. And latterly, the launch of the Alfa Romeo Giulia, and LCV also performed well year over year, growing some share and continuing to show our strength in that segment.

We obviously spent more money launching the products, but overall I think getting to 2.5% margin was a good performance, but clearly still have opportunity to improve as we look at some of the competitors margins in the EMEA region. Then Maserati also had a very strong second half with the success of the Levante. We got to 42,000 units shipped, of which about 15,000 were Levante. And so our adjusted EBIT driven by that improved mix was up threefold to EUR339 million, and a nearly 10% margin for the year. I think also importantly our distribution channels are in very good shape, our inventory is in good shape looking into 2017 as we continue to launch this brand with the new impetus of the new Levante product.

Moving to page 15 on the component side, I think a strong performance from Marelli which continues to improve its volumes and its margins, and drove the 60 basis point improvement up the 4.6% for the year. And continues to be around 70% non-captive business in Marelli in lighting and powertrain continues to compete well in the market.

So that's the 2016 performance, the next few slides I just take stock a little bit on where we are and why we feel 2017 and 2018 targets are achievable. Page 17, just very quickly not to dwell on the past, but clearly we have come a long way since 2014. And I think most importantly we significantly reduced our net industrial debt down to the EUR4.6 billion, where as the original plan issued in May 2014 had a EUR10 billion number at about this time.

So obviously there was the Ferrari spin, there was the convertibles, also improved operating cash flow both last year and this year driving that improvement. And I think moving on to page 18, just quickly show we're not expecting any miracles from any of the markets, I think keeping NAFTA flat for 2017 and 2018 is a very reasonable call on the US market.

APAC and China showing some slow growth continuing, Latin America some level of recovery we expect to come in the second half of 2017 but we are prepared if necessary for a slower trend from Brazil. And I think EMEA continued to show some level positive trend as we've seen in 2016 and we have now the product to be able to continue to improve our share performance.

Page 19, this reiterates the 2017 guidance that I talked about from the first page. I think we do expect first quarter to be a difficult comparative come to last year, in large part because NAFTA we have Compass Patriot down [in sales] as we start to prepare for the Cherokee installation there, and we will be looking at a tough first quarter. But I think overall for the year, we do have a number of product launches which I mentioned earlier and you can see on the bottom of this slide, which will allow us to continue the progress shown in 2016 particularly in EMEA, in Maserati and with Alfa on a global scale.

So we feel we have the products to continue the trend of improvement that we've shown. I think we'll be very focused also on the cost equation in NAFTA. Obviously NAFTA doesn't have the same level of renewable product as we have had in the past. We do have some important launches coming at the end of 2017, the beginning of 2018, I think 2017 is going to be very focused on continuing to improve our mix performance with the current product and also working on the cost equation.

Moving to page 20, the message on this slide is principally that to get from the EUR4.6 billion of net industrial debt at the end of 2016 to the net cash position that we are targeting for the end of 2018, clearly the key driver is generation of EBITDA. Our 2016 EBITDA was about EUR12 billion. We are looking at target of above EUR13.5 billion for 2017, and then above EUR16.5 billion for 2018 to generate that EUR30 billion you can see in the first column here of adjusted industrial EBITDA, driven by the businesses we've already talked about.

I think that is clearly the key driver, we are not planning for working capital to be the key driver. Most of the working capital impact in the two years will be in the second year, I think, but I think we're looking at a solid EBITDA growth continuing, with CapEx flat at about EUR8.5 billion to EUR9 billion a year to get us to our net cash target.

Finally the last page of 21, basically we iterate that our planned guidance targets stand. The sort of growth we are looking at year as an annual growth rate in 2016 to 2018 is comparable to the type of growth we saw from 2013 to 2016 at about 23%, 24%. Clearly the drivers are different, we had a growing market in the US in the first part of the plan, but I think we have in the second part a more robust portfolio businesses. We have less dependence on NAFTA for the growth in 2017 and 2018 and Maserati, Alfa and the other regions will help us to continue the growth that we have seen thus far.

So with that I'll close the presentation and hand it back to the operator to take questions. Thank you.

(Operator Instructions)

John Murphy, Bank of America Merrill Lynch.

Good morning, guys. Just a first question on the 2017 and 2018 outlook: Obviously it looks a little bit optimistic to us, and I think it's admirable that you're shooting for these targets. I'm just curious, as you fight the clock, on the North American cycle specifically, if you saw the market deteriorate a little bit and this 2018 outlook may not be achievable to 2019 and 2020, are there any levers that you may pull on the cost or product or pricing side to try to hit this in 2018? I'm just trying to understand, if the market dynamics don't shape up quite as well as you think they might be, if you just would accept that you might just hit these targets a year or two later and not rush to get there?

Just to be clear, I'm not sure where your level of skepticism about 2018 comes from, but I think that we have a relatively benign view of the NAFTA market in 2017 and 2018. I don't think we see any sort of upheaval in the demand function in the US, especially after the recent election and the focus that the President of the United States has placed on economic growth for the United States. I feel relatively comfortable over the next 24 months, at least from a volume standpoint are going to be relatively benign. They may not, and I think our forecast reflected some of -- they may replicate what we saw in 2016, but they're certainly within range.

One of the things about the 2018 plan is that, as you well know, it's a composite of a set of targets that have come across from the regions. I think that we have been prudent both in terms of EMEA and Latin America in terms of expectations, and I think that there is potential upside from those regions in terms of the delivery of performance.

As Richard mentioned, Maserati has delivered certainly numbers that are consistent with our original expectations, but they also indicate that this is a business which, when cycling with a limited product range, up to about 75,000 to 80,000 vehicles a year, can probably produce well in excess of EUR1 billion of EBIT. And I think that these are important elements of the composition of our earnings profile in 2018.

So if you had asked me today, do I have reservations about the ability to deliver the composite number? The answer is no. Are we going to be dead-on in terms of the exact origin of those numbers I made? There may be deviations, the sum will not differ in my view.

A follow-up on that: As we look at this, is there an absolute need to be at that net cash position in 2018, given what you see going on in the macro environment I guess is maybe the more specific question. Or if you hit this in 2019 -- obviously, you want to hit your target, so I understand that. But is there something that you see that you absolutely need to be in this net cash position in 2018 that would lead you to take some kind of action in case the macro was not shaping up, or the market dynamics are not shaping up for you to hit that number?

No. I think that whatever adjustments we have to make we would do anyway, and we've done these sort of in the past on a regional basis to try and adapt to market conditions. I think the achievement of the 2018 net cash number was a fundamental and integral part of the plan. The capital that has been committed in 2017 and 2018 is capital that will not see benefit accrue to the P&L well into 2019 or 2020. And these are commitments that are made to make sure that there's a day after the completion of the plan, that there is life after the schmuck steps down.

I would be very leery to try and choke back that profile; the intent of the plan was to allow FCA to join the ranks of the respectable in the OEM space. We were the only ones that were levered, given our origin. I think we have gone a long way in sort of gaining part of that respectability back. We need to complete the task, and we need to put EUR5 billion on the balance sheet. It's that simple.

Okay, and then just a second and last question: As we look at the truck market in the US, it's holding together fairly well, but there has been some comments from companies like Ford and other market participants, I think you kind of endorsed these to some degree, that the truck market pricing is getting a little bit more competitive. Just wondering if you could comment on that, and also just the leasing levels you are seeing in crossovers and pick-up trucks at this point, what you're doing and what you're seeing in the market?

We are -- this is the deal with the leasing issue. Since to the extent that we don't run a captive, our ability to access leasing and to make that a viable part of our offering strategy is somewhat limited because obviously whenever we build that into our pricing equation in terms of a lease portfolio offerings in a marketplace, we end up realizing how expensive that option is. We've been reluctant and leery to engage in heavy usage of leasing, and most of the residual risk associated with those, if not all, is not sitting on our balance sheet.

Having said this, we have seen leasing being used by others in an aggressive fashion to maintain share. I've seen nothing disturbing on the truck side that I will not consider to be some normal competitive behavior. I think we're all -- it's a market that is run fundamentally by three large players, and I think it continues to be disciplined. It continues to be incredibly competitive, as it has been for a while. But I'm not seeing anything that's structurally dysfunctional in the marketplace to get me to worry.

The good thing about this plan is that we're eight quarters away from completion. And so we'll have a chance to update you on what we see in the marketplace as we go through this, but as of now I will not be crying wolf.

I'm sorry, just one last real quick one: When you look at the way Ford is discussing their outlook for how Trump's policies, particularly on border tax adjustment and a whole bunch of other policies, might be a net positive for them. If you run the same scenario analysis, as we look at the various puts and takes between border tax adjustments, interest deductibility, and lower tax rates, and how that would impact you, and if you'd be in a similar situation? Or it does appear that for the industry at large it might be a net negative, but I'm curious on your take.

By the way, somebody just flashed me a copy of the Ford earnings release, and I'm trying to compare it to our measly PowerPoint presentation. The day I start putting my picture on the press release, I think is the day that you should probably go in the other direction in terms of holding the position long or short.

There's no doubt that the full delivery of the set of financial, the set of economic parameters that President Trump has raised are overall positive for FCA. This whole notion of deductibility of capital, the border tax adjustments if property executed with symmetrical treatment of revenues and cost of goods sold, if all those things were to happen, including a reduction in corporate rate, these things are all bottom line accretive.

It is very difficult, even after the meeting that I attended in Washington a couple of days ago, I'm unsure as to what part of that package, if any, is going to get rolled out. I think we intend to work with President Trump and his staff to try and sort of at least give them our views as to what the impact is. Overall, the sum of all of them is very positive.

What concerns me is asymmetrical treatment of some of these proposals, especially on the border tax side. And so we need to -- we have run the numbers, overall they're good things. How many of them are doable within which period of time we're talking about here -- this is a two-year view up to the end of 2018. I just don't know whether some or any of them will work their way through the 2018 numbers. That's why I think we presented them reflecting the current state of affairs.

But the policy direction that is being taken by President Trump is something that we appreciate, Mark, apart from joking on Mark's picture, but Mark was clear when he met with the press on the way out from the White House about the fact that we appreciated the President's repeal of any effort to try and introduce [DTIP]. That's something that we share directionally. I think it was a good thing. And as part of an overall economic framework, we're moving in the right direction. So overall positive, and if it does get executed, I think it will benefit us at FCA.

Thank you very much

Patrick Hummel, UBS.

Yes, thank you, good morning, good afternoon, and thanks for taking my questions. My first question relates to the EBIT bridge 2017, this about EUR1 billion uplift year over year. You've talked about product launches driving that growth; can you give us an indication what sort of pricing situation you have baked in, in particular for the NAFTA market? That's the A part of the question.

The B part relates to the growth in net income and adjusted net income that you're guiding for, which is about EUR0.5 billion. I appreciate that you have to pay taxes on the incremental EBIT, but nonetheless, in light of debt reduction and as a consequence, reduced interest payments, I would've expected the net income line to increase a bit faster. Is there any offsetting tax item that we should be prepared for, for 2017? That's my first question.

I'm answering on behalf of Richard Palmer. Richard Palmer is stashing again.

Could be. I think we have a relatively prudent view on the tax rate, Patrick, so we're obviously going to work on that as we go through the year. Obviously it depends on the mix of the earnings themselves, but I agree with you, if we hit these numbers as we would expect to, there's potential upside on the difference between adjusted EBIT and net income.

Okay, thank you. And on pricing assumptions for the EBIT bridge 2017?

Yes, as we mentioned before, the US market we expect to continue in a similar trend to what we've seen in 2016. The overall pricing environment has been very competitive, but I think we've seen us being able as an industry to increase average transaction prices as new products are launched. And so we are looking at some launches in 2017.

I think at the end of 2017, beginning of 2018, we have some significant launches which will allow us to continue that trend. But I think for us, in NAFTA, the key is to continue to work on driving positive mix on truck and on Jeep, and working on the cost equation with prices being at a similar trend to 2016.

Okay, thank you. My second question regarding 2018, your EBITDA guidance, EUR30 billion, you're saying you expect EUR13.5 billion in 2017. That suggests obviously EUR16.5 billion in 2018, another EUR3 billion. Can you remind us on the product side, I mean it's a big launch here of the new Ram 1500, is that going to be the predominant driver in getting you another EUR3 billion EBITDA year over year? Or is there anything else we should be aware of?

The new Wrangler is launching at the end of this year.

Okay. But I guess the lion's share would be with the Ram 1500?

I think it's equally shared between Ram 1500 and the Wrangler. (Multiple speakers) there are other factors that are impacting on that growth, but from a product side, the single largest contributors are those two.

Right, thank you. And finally, it seems President Trump puts strong emphasis on doing investment and creating jobs in the US. Based on the meeting you had with the President, I'm just interested in your thinking at this point in the cycle. You're obviously doing your investments anyway, and then retooling Sterling Heights. Is there any potential investment you would be considering on top of this, and in light of that we are sort of at a plateau situation in the US market? Are you ready to commit any additional budget for investments in the US as needed?

One of the things that we announced as part of the industrialization of the Wrangler pick-up truck out of the Toledo region was that the completion of the industrial realignment plan and the refurbishing of Warren, which currently makes the Ram 1500, with the introduction of the Jeep Grand Cherokee would have actually made that architecture available for further utilization. One of the things that the press release made reference to is the fact that, although there is no commitment to do so, this realignment will allow at the relevant time for the US manufacture of the Ram heavy duty truck which is currently being produced in Mexico.

When taken through its full extension, it's possible that if we were to find the right economic environment to do so, whether it's in terms of taxation or incentives or otherwise, that we will find that we will be in a position to strengthen our pickup, our US manufacturing of pick-up trucks, in a significant way starting with a heavy duty truck which could start as early as 2019 or 2020. But we need to see more in terms of the deployment of the economic plan that President Trump has in mind.

I think our willingness to follow the President in his direction was made clear even before he announced -- even before our meeting earlier this week. And I think we have the wherewithal now because of what we started doing and the completion of that work which will be visible by the end of 2018, to effectively entertain a repatriation of the truck manufacture back in the US, which has been one of the things that has been anomalous about this collective roles between the United States and Mexico now for a number of years, with such a large portion of the pick-up truck market being manufactured in Mexico.

We will continue to look at this. There's no commitment on my end to get it done, but certainly the infrastructure to accomplish this shift is in place, and I think properly motivated, it could be executed relatively quickly by FCA.

Okay, very clear, thanks very much.

Adam Jonas, Morgan Stanley.

Hey, guys, and Sergio. Sergio, you may be a lot of things, but you're not a schmuck. From what I understand, I believe that Trump -- well, actually I'm going to quote you. I think you said a couple, a few days ago: From what I understand, I believe Trump should like a GM Chrysler tie-up. I think you said that. How did you come to that understanding, and did you actually talk to him about that?

Let me answer, I had never spoke to President Trump about that option. And I did not use any sort of Ouija board or prognostication techniques that are really that weird.

The benefit of that tie-up -- and I don't want to spend a lot of time on this because it's not on the card. I think we've gone through this before; it has been turned down, we were rejected, I get all that. And I think, I don't want this house to be disturbed by anything other than the accomplishment of the 2018 plan. I mean this is the only priority we have.

But as a beer conversation at a bar, one of the things -- the reason why the comment was made, and I made it en passant to somebody, was that -- I think it was the press -- but it clearly indicated that a tie-up of that caliber will create the largest American car company, and it will create the largest car company in the world and it will be American-based. And if I follow this argument about America first, it doesn't take a lot of scientists to associate the creation of that entity within American soil.

By the way, I make these comments and I said these are -- this is the cocktail conversation. It's irrelevant vis-a-vis the plan. I don't want our people inside our house to be worried about this.

Things that are inevitable will ultimately happen. If it's in the cards, it will transact at the relevant point of time. It is irrelevant to vis-a-vis the accomplishment of 2018.

That's it; that's all I had, thanks.

Martino De Ambroggi, Equita.

Thank you. Good morning, good afternoon, everybody. My first question is on the slide number 20 regarding the free cash flow, and the bulk of the improvement is related to EBITDA and working capital. And I was wondering what is the underlying volume assumption?

I remember that the original assumption was in excess of 6 million units. And you already answered clearly that the main driver would be mix, but maybe another percent of the presumably lower volumes there would be also some contribution from costs, presumably ForEx? And also if you could provide us what is the underlying assumption?

Hi, Martino. I don't want to give a target on a volume basis. I think we are focused on producing the EBITDA and the cash flow. I think, as we talked about the different businesses, clearly the driver is the product that we're bringing in to the marketplace, and the performance that creates.

We have at the end of 2017 and beginning of 2018, as we just mentioned, some key launches in the NAFTA market being the new Wrangler and the new light-duty truck, which will allow us to grow the NAFTA position in SUV and in truck. And also with the increase in capacity on the Wrangler, to further globalize the Jeep brand. So that's going to give us volumes and margins. And I think we also are looking at growth coming out of EMEA, and Maserati that we've seen this year, also giving us further contributions as we consolidate on the introduction of Jeep and the introduction of the Levante.

I don't want to get into giving you an excel spreadsheet version of the variance analysis, but I think that we've given you the broad-brush targets by segment back in January 2016, and we're confirming that broad-brush we're continuing with that strategy, and nothing has substantially changed. And as we mentioned earlier, the capital has been spent and the products are coming, so there are no big changes that we can make on the product plan. And so we just need to execute to get to the targets that we outlined in January 2016, and which we are confirming now.

Okay, thank you. My second question on the Alfa Romeo, if you could provide us an update on if contribution or what portion of the CapEx were spent so far, and how the new distribution network -- global distribution network is progressing? Thank you.

Let me answer the easy question, and then the other, first question, I do not know the answer to, but Richard must have some idea. I would assume that the number is in excess of EUR2.5 billion that was spent on the relaunch of Alfa and I think he's levitating me up so it must be EUR2.5 billion because of the two cars that were launched.

In terms of contribution, in 2016 it was negative; it's expected to be negative in 2017. We're still going through the ramp-up phase.

As I mentioned, the investment in Alfa Romeo, and certainly the technical investment in the architecture, was something that was designed to benefit more than Alfa. And then by itself it is effectively, and I repeat this again for the record, it is designed to provide the tactical underpinnings for the whole Maserati development going forward, certainly beyond 2018. For the large UV vehicles that are going to be made available to Jeep and for the rear-wheel-drive cars that will eventually replace the current fleet of Dodge vehicles that are being sold in NAFTA. So it was a wide-ranging exercise which is -- as all these things work, it's going to take time to implement and execute through a variety of brands and applications.

The development of the network is going well. We have made good progress in the United States. We're beginning to make significant progress now in Asia-Pacific. The European network is pretty well being cleaned up.

I think the pairing of Alfa and Jeep has represented premium offerings and that context is beginning to take hold. So distribution is not going to be our problem, I don't think. I think we need to be very careful that we launch products which are consistent with the newly reestablished DNA of the brand, and I feel comfortable that both the Giulia and the Stelvio are very good first starts into that venture.

I can tell you that if you, and again, I ask you if you approach this and you want to go read car magazines and evaluations of the performance of the Giulia that you will find that it's been set -- the Giulia does set a new standard of performance in that segment of vehicles. I expect that the Stelvio will eventually be recognized from the same level of contribution to the automotive landscape. So I'm happy about what's happened, I'm happy about the way in which the cars are rolling out, and I'm happy that we have finally found clarity of thought in the extension of these architectures well beyond Alfa.

Okay, thank you.

Rod Lache, Deutsche Bank.

Hi, everybody. Two things I wanted to ask about, one is, I believe the biggest driver of the 2018 improvement, or the drivers, would be the capacity realignment in NAFTA, the new products here, and I think also some Latin America margin improvement that you had spoken about before. Can you give us any thoughts on some of the key drivers? I think you've said before, or I know you've said before there's 600,000 units being realigned in NAFTA between Sterling Heights and Toledo North, but presumably not all of that is available in 2018. And then what the key drivers might be in LatAm, because you're not expecting a dramatic improvement from a macro perspective.

Rod, if I could just add a piece to the first sort of assertions that you made about the capacity realignment in the US. One of the things, and this is something that should be certainly understood by our competitors, but this capacity realignment that we have instituted by effectively lessening the reliance on manufacturing of passenger cars and shifting most of the US, if not all of the US, network to SUVs and pick-up trucks has, in addition to the potential benefit of serving the US market, has as its primary objective that of strengthening the export capabilities of the United States.

We have gone for a long period of time for both -- for all the upper-end vehicles of Jeep, we have suffered from the inability to provide product internationally. And so both the Wrangler and the Grand Cherokee have been severely curtailed in terms of international sales, the realignment of the footprint is going to unleash the possibility of using those assets more intelligently. The one car that has not had that problem for a variety of reasons, also because of lack of attention, has been the Cherokee. This is something that we, by moving it to Belvidere now, we will have both the capacity and a phenomenally focused approach to try and turn that into a similar success story as the Grand Cherokee and the Wrangler have been.

But the upside to the story on the realignment of the US footprint has been the export capabilities out of the US. And it's a significant portion of the benefit that accrues to us. It comes to us at a lesser margin. But in terms of utilization of plant infrastructure, it is phenomenally helpful. It is one of the reasons why I think we expect to be able to improve margin in a market in the United States which we consider best to be flat or in line with 2016, and with the same type of comparative characteristics that have characterized the performance of the Business in the last couple of years.

We should not be focusing on the US market as being the absolute necessity for this plan to be accomplished. I think the industrial realignment was absolutely necessary to allow us to do a variety of things, one of which was to serve the US market.

But on the Brazilian story, I'll get Richard to give you a view of what's coming down the pipe in terms of 2017 and 2018, which is significant because now that we have launched the Pernambuco plant and it's running three products, I think we shifted our attention to the sort of classic mass-market options that were available [out of Betim].

I think the first thing is that Pernambuco did about 110,000 units last year, so even in a relatively flat market, we believe that with the two Jeeps and the Toro out of Pernambuco we continue to grow performance out of that plant. And clearly, as we have mentioned before, that plant is the main driver of profitability in Latin America for us.

The second point is Betim, we do have some key launches coming for renewals of some of the key vehicles out of our Betim plant, which have been, in the past, the bedrock of the Fiat brand. We had sort of delayed the investments there to focus on the introduction of Jeep and the pickup out of Pernambuco. But we're going to be investing in Betim; they're not that significant investments as compared to Pernambuco, so we're making incremental improvements in the product and in the powertrains also for improved performance. Betim will start to improve as we get into 2018.

And then also Argentina, we have seen a good financial performance out of Argentina, which is contributing positively to our LatAm results. And we really need also to extend our Latin America coverage to the rest of Latin America where historically we have had limited focus because of both the fact that Brazil was out of capacity and also we didn't necessarily have the right sort of product offering to be competitive. I think we have an opportunity also there to satisfy demand, which in the past we haven't.

Those things I think will all occur and improve our performance even in a relatively unexciting growth of the market. And clearly if we do see any sort of improvement in economic conditions and a return to the sort of market levels that we have seen in the past, then I think we are very well positioned. But we are not assuming that's going to happen. I think the key is for us to, first of all, max out Pernambuco, secondly promote the brands into the rest of Latin America because we do have capacity now, and then at the same time we are making our product portfolio in Betim renewed.

Long diatribe by Richard. One of the things that has never happened because of historical constraints on demand and supply conditions in Brazil is that we have never been able to use the South America plants as export hubs. And so some of the product that is making its way into Brazil now is Brazilian origin. I think we need to find better ways to use that infrastructure to effectively get global distribution.

So this is part of a big task. We have Davide Mele with us here who was attending those meetings, the last meeting that he is attending in his current capacity. I'm not sure exactly what your fancy title is, but you're a Chief of something. But Davide is making his way down to Brazil as Deputy Chief Operating Officer, I think. He has worked there in the past, he's going to be down there in a couple weeks to take on the role, and I feel relatively comfortable that with him and Stefan, they will be able to drive much better performance out of Latin America, not just in terms of the Brazilian context, but to make this globally relevant.

Okay, and just a second question, if I may. I think others have done some calculations on what border taxes specifically could do to the cost of an average car sold, or vehicle sold I should say, in the US. And the numbers are north of $2,000 a vehicle, something like $2,300 to $2,600 increase in cost per vehicle. For Fiat Chrysler, significantly less.

Given that, but at the same time you're the only one of the Detroit 3 paying cash taxes right now, do you think that this policy, the border tax adjustment specifically, could have competitive implications for you versus the D3 or you versus others? And it sounds like you're acknowledging that it could have some implications for capital spending in the future. Is that correct?

Rod, your question is loaded. I'm just going to avoid playing with it because of the historical, of the origins of the tax loss carry forwards of my colleagues in Detroit. As you well know, we were not blessed with an endowment so we've had to scratch our way out of the grave, and we never had that dowry available for utilization.

But I think that it does have implications vis-a-vis our capital commitments, the potential capital commitments that we are making in the US post 2018. And I'll get Richard to answer the specific question on the border tax differential.

Well, I think, on the border tax differential, clearly we have -- the overall net impact to us of imports and exports is balanced by our ability to manage both the US plants for export to Canada and Mexico, vice-versa we have the volume going the other way. I don't think we are significantly different to General Motors in that configuration.

I think, as we go forward, we are making Jeeps for global distribution out of the US. And as we globalize the Jeep brand, I think we have possibilities to continue to improve that position and help our overall impact on any border tax impact.

Given the lack of clarity of exactly what the mechanism could be, I don't want to get into a dollars-per-unit discussion. I think the globalization of Jeep gives us a lever which is important in our ability to maintain competitivity in the presence of that type of tax mechanism.

By the way, it's unique to us because of the globalized reach of Jeep is pretty well established now. We crossed the 1.4 million mark in 2016. We need to walk over 1.6 million cars out by the end of 2017 and we should be hitting the 2 million number by 2018 with Jeep coming on relatively strong out of the US infrastructure and the rest of China.

So I think overall, of the three, we're the ones that could potentially benefit most as we go through the expansion plans on Jeep. But as Richard said, let's wait till the details come out, then we will be able to make a more intelligent call.

Great, thank you.

George Galliers, Evercore.

Hi, good afternoon, I have two questions. First is just on raw materials. We have clearly seen a move in the spot rate on most raw materials between the average last year and where they are today. What raw material headwinds are you expecting through next year?

We are expecting around EUR300 million of impact, negative, in 2017 compared to 2016. Notwithstanding now I think, as we've been talking about, we're making a lot of progress on our ability to improve both our technical and commercial savings on our more global product portfolio that we now have in place. So we would expect to more than offset that number overall. But there is definitely a negative impact year over year because of steel prices in particular.

Okay, thank you. And then the second question was just very specifically around the Jeep Cherokee and the sales performance in the US in Q4. It looks like Cherokee sales were down around 35% year on year. Could you perhaps just speak to the dynamics around the Cherokee? Was it just that you were pulling out of some leasing or less profitable business, or is there an explanation you can provide for that?

Simple answer is that we have withdrawn that car from the fleet pool that would have made otherwise available through fleet sales. And that shows, and that's really had an impact on absolute numbers. The profitability of the process has been improved on a per-unit basis, but [loanings] have gone down.

The interesting thing about Cherokee is that, that is the single largest issue that we need to deal with in 2017 as we walk into the MCA and launch again in 2018 with a refreshed look for the Cherokee. We need to make sure that car is nurtured through the distribution channels in 2017, not just in the United States but internationally. The move to the Belvidere plant, which was designed to provide additional capacity, needs to be fully justified and we need to use that capacity to try and accompany the rest of the Jeep brand as it reaches outside the US into the global markets. Manley, who's now been repatriated from his APAC assignment, has got that as his primary task in 2017. So I expect a much better performance than you've seen, at least numerically, coming out of the US in 2016.

Great, very helpful, thank you.

Monica Bosio, Banca IMI.

Just two quick questions, the first is: Could you please quantify if it's possible, the Obamacare cost in 2015? And the second one is, maybe it's too early to ask, but do you plan to account some potential provisions from the EPA fine in 2017?

And I've also two more general questions. One is on Europe and Brazil. Do you see for the room of improvement in margins in EMEA given its stable situation outlook in 2017, and what do you think about a potential margin in Brazil even in the worst case scenario, which means flex volumes? And very last question is just your feeling, what could happen in case of complete repatriation of the plans? So it's just my question, what do you believe could be the net final impact on the automotive sector if the manufacturing footprint might be moved from Mexico to USA, net for net, and could this accelerate a consolidation trend? Thank you very much.

Monica, I'm afraid I don't know the cost of Obamacare, so we will get back to you on that one. I don't think it's that relevant for our financial performance, but I don't have it here.

In terms of the EPA, obviously we have a discussion at year end, we don't have any elements to make any sort of provision at this stage, and so obviously we'll be following it through as it develops. But at this stage we haven't booked any provision.

In terms of European margin, I think we've seen a good performance in 2016 from the EMEA team, and getting to 2.5% was a good year-over-year improvement. We're still a ways away from some of our competition's margin in the same jurisdiction. And I think we are, as we talked about, forecasting that the EMEA market should continue to have slow but positive trend in 2017 from a total market point of view.

And we are going to continue to work on the launches of the new products that we had in 2016. For a full year for Tipo and a fully year for Compass, full year for the fullback, and so we have I think product and the full year for Giulia and obviously the new Stelvio. All of those things are going to help us to continue the progression in margins as we try and close the gap to competition.

Brazil margins in a worst-case, to some extent hope would be that we've just seen it. We're at breakeven in 2016, the market was pretty horrible. I think we took a lot of actions on cost, we have been ramping up Pernambuco but it's not -- we didn't have a full portfolio in the plant for the year. So I think as we go forward we would expect to improve the profitability in Brazil given the opportunities from Pernambuco in particular and the other things that I talked about earlier.

Let's say that taking into account your outlook for Brazil, taking into account Pernambuco and the fiscal incentives, the introduction of the two new Jeeps, et cetera, can we assume that we can achieve at least a mid- single-digit margin? Or I'm totally wrong?

A mid-single-digit margin is anything in excess of 0% up to 9.9%?

Okay.

Okay, let's agree that it's in that range. I will take the range.

Just to kill the other question that you've asked, which I think is going to send Richard into apoplectic -- the question about repatriation of all the manufacturing footprint into the United States has got monumental consequences to the industry overall. And I, given the smallest guy out of Detroit, I should not be the one that's being asked to answer that question. I think there are repercussions that go well beyond FCA.

Since Mark Fields is going to be on the air in about 45 minutes, you should ask Mark. I agreed with that with him when I saw him in Washington that if I couldn't answer any questions, I would ask you to pass it on to him. He's got 45 minutes to get an answer ready, so by all means, ask Mark.

Okay, thank you very much.

Charles Winston, Redburn.

Hi, good afternoon, Charles from Redburn. Just two for me, thank you. The first one is, the other activities, the eliminations, that number which I think was minus [EUR511 million] in the year, and about minus [EUR250 million] I think in the fourth quarter. It's a pretty simple question, what is it? It has gone up a lot since last year and it was pretty big in the fourth quarter. If you can help us understand what's in that number, it's now getting quite sizable, and where that might go in the next year or two, would be useful.

And the second question is just on that small negative pricing that we saw for the NAFTA region in the fourth quarter, can you just confirm that was all an FX impact and that underlying pricing net of FX was still moderately positive? Or was there some element of pricing in there, and if there was, was it relating to any particular product on that number? Thank you.

So the eliminations and other is principally eliminations and also includes intercompany profit eliminations and also includes launch costs of the Alfa Romeo Giorgio platform. As we have been working on that launch, we haven't been debiting the cost to the regions yet because they haven't been getting any vehicles. As we go into 2017 now, we will be assigning, based on sales, both the revenues and the cost of those vehicles to the regions. But as we were in the launch phase, we held those centrally, so that is why it is an increase year over year.

Then the price question, in NAFTA, yes, there is exchange on Canada and Mexico. The fourth-quarter pricing trend was pretty much in line with the prior year trend, although we did have quite a competitive few months on the pickup in Q4. I think the ebbs and flows of the seasonality of pickup with year-end market increases are fairly normal, but I don't think we saw anything that concerns us going into 2017 for NAFTA.

Got it. Can I just very quickly follow up on the eliminations? What region are we mostly eliminating from? In other words, that's an elimination of a profit that you've shown in the region, and then you're eliminating it out. Is there any particular region, would I be right to assume it's mostly stuff we are eliminating out from NAFTA or is it from another region?

Yes.

Thank you

Richard Hilgert, Morningstar.

Thanks for taking my question this morning. Halfway through the plan you've gotten away from discussing the shipments and increased the revenue number up to EUR136 billion. With the release of the results here in this quarter, we've seen on the different regions the volume and mix bars are pretty much green, with shipments being pretty much negative, relative to the amount or degree of change in volume and mix.

That EUR136 billion at the end of the plan, the mix that we're looking at, is this something that's going to be dependent wholly on China? Is the mix got to change substantially in NAFTA and also in South America and all the different regions, or is there one or two regions in particular that make a big difference? That's the first question: What's going on with the mix versus the number of shipments?

And then on the CapEx, going at a run rate of EUR8 billion to EUR9 billion throughout 2018 now, a lot of that being spent on developing the product portfolio, getting plants outside of the US up and running, what kind of a run rate for CapEx, once we get past this additional incremental spending that's been going on throughout this five-year plan, what does it look like beyond 2018? Does it pull back from this level or is this a run rate that we should expect for the next few years afterwards?

In terms of volume mix, Richard, you're right about the 2016 over 2015 performance being driven by a lot of the mix improvements. I think as we go into the 2017, 2018 period, we're going to see volume improvements coming from Alfa, from Maserati, from Jeep, to get to the 2 million number, and those are all driven by product launches. We have the NAFTA realignment to help us with that, plus the extra capacity we talked about earlier.

I think Latin America, we aren't expecting it to go back to 3.6 million vehicles in Brazil in terms of the market, but we are expecting some improvement there as well. So the improvement in revenues is driven by mix improvements continuing, but also by volumes. It's particularly as we get to second half of 2017, and 2018.

The other question on CapEx, I think you're right, we have been going through a fairly intensive product renewal and manufacturing footprint upgrade, over the last few years. It's a good question as we look at 2019, 2020, in terms of spending, where we think we are going to be. I think on a prudent level from a planning point of view, we're looking at spending between CapEx and R&D about EUR10.5 billion as we look at also the expense R&D.

I think it's likely that from a planning point of view we are looking at a relatively stable level of spend through 2018. And then we'll look at the amount of investment we'll need on the technology side from R&D. And I think we will see a change in the mix from more -- less capital on plants and platforms, and more of the R&D on the technology side as we apply that technology across the portfolio for which the platforms we're implementing have been designed.

Okay, very good, thank you very much.

Philippe Houchois, Jefferies.

Yes, good afternoon, a few questions on my end. The first one, Mr. Marchionne, we've had some worrying numbers from Santander yesterday, and of course, Ford's been talking about it. At this stage strategically, do you think you're better off not having a [single], so you are kind of neutral position having access to funding partners at Santander?

I've got to be careful here because, one, I have a huge amount of appreciation for Ana Botin; I have a huge amount of respect for Santander. So any comments that I make about [thinkco's] are not designed to reflect either positively or negatively on our partners, including (inaudible) in Europe.

Let's just agree that every time I see numbers being reported by our competitors, I drool over a portion of their P&L which I don't have. I just saw the numbers come across Ford, and the number was in excess of $1 billion. And when you see that kind of profitability that is being left on the table and we cannot participate, I wonder whether it's something that we shouldn't look again. I can tell you that because of our capital structure and because of our history, dreaming in Technicolor or having our own thinkco would have been a pretty unrealistic set of expectations.

And we have never played it in an effective way because of the fact that we couldn't. And it's certainly not envisioned up to the 2018 plan that we would enter that field and play actively. I think it's up to my successor in 2019 and later to try and determine whether it's a proper strategy to use or not. I never had the luxury of having that option, so I will follow it from interest from the outside, but I couldn't afford to do it and I still can't afford to do it until well after the completion of the plant.

Yes, although that [version] of earnings is not cash. As long as you're growing, it's actually cash negative, so I'm just wondering from a value creation whether you are really missing out on not having it?

You know what? The reason why I justified not having it when I was young and foolish, like I was10 years ago, was about the fact that I thought that it would actually distort commercial decisions on the commercial side. Every time I meet with the commercial team, I'm reminded of how much of an idiot I am.

But I understand the cash drainage associated with thinkco's properly run. I think that the cash drainage will not worry me. If they get abused and distorted by commercial realities to do things that are fundamentally unnatural, I worry.

All of us will remember the demise of GMAC going back to the last decade. Remember that the reason why that went sideways is because of the fact that it started doing things that were already outside of its mandate, and subprime mortgages are not far away from people who lend money. I remember having a conversation with both Fritz Henderson and Rick Wagoner way back at the time, about the fact that they thought that the market had underestimated the value of the subprime mortgage portfolio inside GMAC. Within three years that world was turned upside down and their reality disappeared. So we need to be careful.

I maintain one principle which I think is true and I think it characterize our operations here for the last 13 years. Our objective is to make money selling cars, and the minute that we distort that objective in some fashion by creating ancillary services that effectively provide a better opportunity is the minute that we should really rethink the way in which we operate.

We have stayed pretty steady on that objective; we have not wavered. I think whoever comes in after me needs to look at this and maintain that objective, otherwise we will end up with very, potentially dysfunctional results for the Business.

Yes, if I can follow up, if I look at your bridge to EUR45 billion net cash in 2018 on page 20, look at the moving parts and where do you think you could surprise positive negatively? From my perspective, I think the EUR6 billion of financial charge and tax, if you aggressively deleverage, you might surprise positively there. (Multiple speakers).

That's Richard Palmer's stash; I never touch them.

Right. Richard, what do you think?

Obviously, the easiest way to try and positively surprise is by overdelivering on the operating earnings performance. The machine can, and I think if I take a benign view of delivery, across the region and across the brand, I envision a number which is in excess of what's on paper. And so it's quite possible. If the machine runs, and it runs as I would expect, I think we should be in excess of a number as large as it appears on paper.

I mean, I told Richard about putting EUR30 billion in EBITDA on a sheet of paper is going to spook the hell out of most people, but fundamentally it's made up of two components of eight quarters of successful execution of a plan. EUR14 million this year, EUR16 million next year. Richard wants to be sufficiently detailed by calling it EUR13.5 million; we will be well above EUR14 billion in 2017.

The key to delivery of the plan is still operational delivery of earnings and cash. Everything else that comes on top of this, whether it's better working capital management or reduction of financial charges, taxes, and more benign tax environment in the United States, which somebody correctly pointed out we're still paying cash taxes in the jurisdiction, all those things will help make the target. But the biggest single driver is operational delivery, selling cars, making money, and making sure that we're extracting as much of a margin from this process as we can.

Right, thank you very much again.

That will conclude the question-and-answer session. I would now like to turn the call back over to Joe Veltri for any additional or closing remarks.

Thank you, Alex. With that, I think we will close today's call. Thank you again for joining us and have a pleasant day.

That will conclude today's conference call.