Fiat Industrial SpA (FI), the truck and tractor maker spun off from car manufacturer Fiat SpA (F) in 2011, plans a U.S. stock listing before October for the company it’s forming with the CNH Global NV (CNH) farm-equipment division.
Fiat Industrial’s shareholders will probably vote in April on completing the merger with CNH, Chairman Sergio Marchionne said today on a conference call. The new company will maintain Fiat Industrial’s dividend policy, and it will take steps to reduce cash by 50 percent because of an “excess,” he said.
CNH, the maker of Case and New Holland bulldozers and tractors, is 88 percent-owned by Turin, Italy-based Fiat Industrial, which made an offer in November for full control. Plans for New York Stock Exchange trading of the manufacturer’s shares, and setting up its headquarters in the Netherlands, are part of Marchionne’s strategy to shift the company away from its roots in Italy, which is in its fourth recession since 2001.
“Hopefully we should be listed in the U.S. sometime in the third quarter,” probably in the first half of that period, Marchionne told analysts on the call.
Fiat Industrial rose as much as 1.6 percent to 9.63 euros and was trading up 0.7 percent at 5:14 p.m. in Milan. The gain reversed a drop earlier in the day, when the company announced fourth-quarter profit that missed analysts’ estimates.
Net income in the period jumped 20 percent to 148 million euros ($201 million), even as an economic contraction in Europe and declining industry demand in Latin America hurt sales at the Iveco truck brand, Fiat Industrial said. Profit was less than the 222.7 million-euro average of seven analyst estimates compiled by Bloomberg. Group revenue rose 2.8 percent to 7.01 billion euros.
There’s “no bad news” in Fiat Industrial’s results, Marchionne said.
The European market for commercial vehicles in December fell to the lowest level since October 2009 as the economy of the countries using the euro contracted, according to industry association ACEA. Daimler AG said yesterday that its truck business, the world’s biggest, may cut as many as 1,300 factory jobs in North America and 800 non-production posts in Germany.
The western Europe truck market is likely to be “steady” this year, while Latin American demand will rebound, Fiat Industrial said today in a presentation.
Iveco should make efforts to expand into the U.S., and has a “great opportunity to leverage” marketing through Fiat SpA’s ties to Chrysler Group LLC, maker of the Ram pickup truck, Marchionne said. The CEO reiterated that Iveco isn’t for sale.
Both Fiat Industrial and Turin-based carmaker Fiat are controlled by Exor SpA (EXO), the investment company of Italy’s Agnelli family. Exor has said it plans to keep its voting rights above 30 percent to maintain control of the manufacturer that’s set up in the CNH merger. Marchionne has said the new entity will have a name that doesn’t refer to Fiat.
Net debt from Fiat Industrial’s manufacturing operations widened to 1.64 billion euros on Dec. 31 from 1.24 billion euros a year earlier amid an expansion program at CNH and a special dividend offered to the unit’s shareholders as part of its raised bid for the unit, the company said. Fiat Industrial plans a dividend of 23 cents a share.
“The only meaningful deviation against consensus is the higher net debt level,” said David Arnold, an automotive specialist at Credit Suisse in London. At the same time, investors can “take some comfort from a higher than expected dividend.”
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