Cnh Industrial and the Capital Markets Day
Fpt Industrial came out of Wall Street as one with Iveco at the end of the Capital Markets Day. The much rumored spin-off materialized at the NYSE (New York Stock Exchange) on last Tuesday at 11 am, local time, in the words of Hubertus Mühlhäuser: Iveco and Fpt will constitute an autonomous entity and from […]
Fpt Industrial came out of Wall Street as one with Iveco at the end of the Capital Markets Day. The much rumored spin-off materialized at the NYSE (New York Stock Exchange) on last Tuesday at 11 am, local time, in the words of Hubertus Mühlhäuser: Iveco and Fpt will constitute an autonomous entity and from the first quarter of 2021 they will be listed independently on the Stock Exchange.
LAST WEEK ANTICIPATIONS ON THE CAPITAL MARKETS DAY
A Capital Markets Day with significant perspectives for CNH, FPT and Iveco
The main topics that introduced and accompanied this operation concerned innovation (meaning 4.0, autonomous driving, predictive maintenance, alternative drives and digitalisation in general) and, secondly, the benchmark, focusing on profitability margins which this operation will make available to investors. What lies ahead for Cnh Industrial and Iveco-Fpt Industrial in the next five years? It was mentioned a 4 percent increase in savings on an annual basis through World Class Manufacturing, the doubling of the adjusted Ebit (8% by 2022 and 10% by 2024), the annual progression of turnover by 5%, return on invested capital for industrial activities at 20% (+600 bps compared to 2018). What is going to be the role of Fpt in this scenario? We can mention some additional figures such as a perspective of +110 bps at 10%, +600 bps at 32% by 2024.
And outside the financial context? The mission of the Powertrain division is divided into three main targets: to expand the portfolio of alternatives; increase margins in the investment-heavy environment; continue the consolidation of the loose engines market. The Powertrain therefore aims at the road.
With the off-road division, Cnh Industrial, with a strong agricultural vocation, will remain linked by a long-term supply agreement. And why with Iveco and not Cnh? Mühlhäuser explained: «Fpt is associated with Iveco because most of the volumes are from the on-road market and because the most strict regulations on emissions come from road legislation and are subsequently spread to off-road applications».
Important thoughts also on fuel-cells
At Capital Markets Day, fuel-cells were also discussed, and it is inevitable, now more than ever, because of the agreement with Nikola Corporation. In fact, at Wall Street the strategic participation in Nikola, amounting to 250 million dollars, has been officially announced, which will be discussed in more detail in the near future. The first thought is always at electricity, but on the alternative side we believe that Fpt and Iveco will be able to capitalize on the resources invested in gas fuels, which will play an active role in the next decade, certainly on the road and, probably, also among industrial applications.
And what about hydrogen and gas if they can find a common technological platform, accelerated by Nikola’s expertise and technological infrastructures on the LNG? For the moment we can rely on the following passage from the official press release: “Fuel-cell technology is the next logical step after LNG-powered engines, since it develops from the existing supply network, allowing on-site production of hydrogen in the stations themselves”.
Mühlhäuser’s words on the future of on- and off-highway
The next five years will see an investment of 13 billion dollars and the prospect of projecting Iveco on the American market, going beyond its usual Eurocentric trend (80 percent of current turnover comes from the Schengen area). An exhaustive picture of this operation comes from the following statement by Hubertus Mühlhäuser: «The off-highway business will be focused on becoming the partner of choice to feed and build the world by creating the global leader in sustainable Agriculture with a highly synergistic Construction Equipment business. The pro forma sales will be 15.6bn US$ of wich 75% are in the agricultural space and a pro forma adjusted EBIT of 1bn US$.
We also concluded that we needed to spin-off our Commercial Vehicles, Medium & Heavy Trucks and buses as well as our Powertrain businesses. This newly created On-Highway company will build on its leading positions in Europe for CV and worldwide for Powetrain to become the global leader in sustainable transportation and propulsion and will become the partner of choice to connect and power the world with pro forma net sales of 13.1bn US$ with a pro forma adjusted EBIT of 0.5bn».
