He’s quite a piece of work this Sergio Marchionne.
Go deeper with GlobalData
Listening to his webcast post-results conference was like listening to a radio drama. “Okay. Can’t answer the second part of the question but we’ll get you an answer.” Sound of door slamming. “We do have that answer but the appropriate finance guy is out of the room.” “Sorry. We did not catch that one. Can you repeat? Very noisy in here. People all looking things up.” Sound of door opening. “Right we have the answer to the earlier unanswered question.”
The Fiat CEO was kind of a mixture of circus master, drama producer, finance director and fire fighter. Very impressive it was too.
The clue to the man’s competence and authority was in the share purchase last September when the Fiat family, upset at being diluted down by the issue of equity to the banks and dismayed at the collapse of the share price from the €25 of 2001 to less than €5 at the bottom, came back in.
They paid €6.50 a share and lobbed out €535m to regain control of the company. They are now back with 30% having been diluted to 22%. The shares are 15% better now than when they bought. At that time, the Fiat family rep said: “There is substantial change underway…improved expectations regarding future financial results.” They were right.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataHe’s human too this guy. After running the show for half an hour or so, he suddenly responded to a courtesy offered to him in an introduction to a question from the Morgan Stanley analyst: “We’ve just had the best year in I don’t know how many years and not one thank-you. Now I have had a thank you so I feel much better.” Every subsequent questioner thanked him.
Nor is he backward in putting his neck on the block: “We have a target of 1.8m cars in 2006 to give a margin of between half and one percent at the operating level.”
It’s not much, but it’s a start and it’s a promise in so far as it can be. It’s good to have.
Encouraged by his tribute and exhilarated by his high wire act of forecasting, it’s time for an argument: “I disagree with everything you say,” he tells the man from JP Morgan. “Our operating leverage is not low and it is sensitive to volume.” Tormenter and ringmaster agree to pursue the row off-line.
He’s honest on Fiat’s worst problem: “All the work needed to be done on quality for the ‘06 cars has been done. Now we are working our way backwards in the product range.”
He believes that the UK is the worst position that he has in a European market and intends heavy spending to fix it. And he believes that the worst problem he has in German retail is with the retailers that Fiat co-owns.
And he will generate cash: “Yes I did say that we will be cash flow positive. I apologise for the recent track record. Before capex of €2.8bn in 2006 we will be generating cash. With the level of profit we expect we would have to be stupid to chew up cash. We cannot.”
It’s hard to dislike the man. It’s hard not to want him to succeed. This is Fiat and Fiat is the biggest challenge in Europe. We all want it to stick around making wonderful cars. But for far too long, it hasn’t.
Rob Golding
