FCA 2019 Sustainability Report
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FCA is a global company with approximately 192,000 employees, providing safe, reliable mobility to millions of customers in more than 130 countries. Our 2019 Sustainability Report refects activities from the 2019 calendar year, prior to the widespread outbreak of COVID-19 and therefore any forward looking statements made in this report are subject to the uncertainty caused by the outbreak. As we face the unique challenges of the COVID-19 pandemic, our frst priority is the health and welfare of our extended FCA family, including our employees, customers and the communities where we have our offces and facilities. Across the world, our regional teams have experienced the spread of the virus in various stages. Best practices, as well as lessons learned from our teams that were initially impacted have been quickly deployed to other regions. We have employed various measures including extending remote working to employees who are able to do their job away from the workplace, social distancing in our facilities and enhanced cleaning. We are reminded of the true value of being part of the FCA family. Throughout this period, we remain committed to our customers and dealers. From the launch of initiatives such as the digitally enabled Remote Sales program in Italy to providing deferred payment plans in the United States, we are supporting our customers and dealers through this period of economic uncertainty. In these exceptional times we are also taking a fresh look at how the ingenuity and skills of FCA can be applied in different ways to help our communities. At the time of this report, our engineers and manufacturing teams in Italy are helping Siare Engineering, one of the few companies making respirators in that area, to more than double their productivity. In addition, in March we started the conversion of one of our plants to make protective face masks for health care workers and frst responders, with initial distribution across North America. Our actions in this unprecedented time represent a deep commitment to our role and our responsibilities in our communities. In the same way, our 2019 Sustainability Report refects that same dedication of our Group to the fundamental principles that will ensure the longevity and sustainability of our Company, employees and communities. SUSTAINABILITY REPORT SUSTAINABILITY March 31, 2020 2019 2 Contents 1 4 Message to Stakeholders 4 Products and Customers 65 Message from the Chairman and the CEO 4 Research and Development 66 Effcient Powertrains and Technologies 69 Sustainable Design 80 Customer Focus 85 2 5 Business Model and Governance 7 Production and Responsible Sourcing 94 Business Model and Value Chain 8 Production 95 Materiality and Stakeholder Engagement 12 Responsible Sourcing 102 Sustainability Targets 18 Corporate Governance 31 Risk Management 41 3 6 Employees and Community 47 Supplemental Information 111 Employees 48 Facts & Figures 112 Community 61 Defnitions, Methodology and Scope 142 About this Report 144 Forward-Looking Statements 145 Independent Auditor’s Report 146 REPORT SUSTAINABILITY GRI Standards Content Index 147 2019 3 Message from the Chairman and the CEO 2019 was a pivotal year for our company. Not only did we achieve strong fnancial results, but we also took decisive steps to lay the groundwork for future growth and proftability as well as to ensure that our company has the scale, expertise and resources to effectively navigate through the dramatic transformation our industry is undergoing. We want to thank everyone in the FCA organization for their on-going contributions during such an important year. Their relentless hard work and professionalism is crucial to our continued success. Worldwide combined shipments totaled 4.4 million units and net revenues came in at €108.2 billion. We achieved Adjusted EBIT for the year of €6.7 billion, with a margin of 6.2 percent. Across our core business operations by region, North America posted record results for the 5th consecutive year, with Adjusted EBIT at €6.7 billion and margin at a new high of 9.1 percent. In the United States, the Ram brand reached a new sales record and, for the frst time, ranked as the number two brand in the large pickup truck segment. We also delivered another year of strong results in LATAM, with Adjusted EBIT up 40 percent to €501 million and margin increasing by 150 basis points to 5.9 percent. In Brazil, we regained overall market leadership and fnished the year in a leading position in key segments such as SUVs, pickups and light commercial vehicles. Message from the Chairman and CEO Message from Results in APAC signifcantly improved, despite continued market challenges. Actions to improve vehicle mix and net pricing along with cost savings and restructuring actions signifcantly reduced our loss compared to prior year. SUSTAINABILITY REPORT SUSTAINABILITY Message to Stakeholders 2019 4 In EMEA, performance was adversely affected by several factors, including continued • In the United States, we are investing $4.5 billion to expand the capacity of our facilities commercial challenges and the age of our product portfolio in the region. Lower volumes in Michigan and build a new state-of-the-art plant in Detroit that will open later this year. and higher incentives, together with increased compliance and product costs, led to a It’s a commitment that will add 6,500 new jobs in Southeast Michigan. decrease in Adjusted EBIT to near break-even. However, during 2019, we took actions • In Italy, we are executing an ambitious €5 billion plan, centered around electrifcation, to invest in EMEA and improve operating performance. We streamlined headcount and with key new products and a new Battery Hub located inside our historic Mirafori further reduced our cost-base in the region. We also continued our focus on moving away complex in Turin, that will assemble batteries for our growing line-up of electric models. from low-margin sales channels. Finally, we announced signifcant investments in key new • In Brazil, we have started a signifcant new investment cycle of R$16 billion (approx. products, which will go a long way towards renewing our product portfolio and improving €3.4 billion), which will see a renewed product line-up for the Fiat and Jeep brands our competitiveness. and add a new state-of-the-art fex-fuel engine plant, which will become the largest powertrain hub in Latin America. Maserati results - with an Adjusted EBIT loss of €199 million - refected the impact of • For Maserati, we are executing a major product-led transformation plan including important actions we took to start to re-position the business. During the year, a the launch of new white-space products as well as several full battery electric and completely new management team was installed, with key talent recruited both internally hybridized models. and externally. We signifcantly reduced dealer stock and committed to key investments to renew and expand Maserati’s product offering, with a regular cadence of new product Undoubtedly, 2019 was another historic year in the evolution of our company because of launches, including a signifcant level of electrifed powertrains, through 2024. These the agreement we reached with PSA for a 50/50 merger that will create the world’s third actions give us a high level of confdence in the future trajectory of the Maserati brand. largest automaker by revenues and a new global OEM equipped to meet the mobility challenges that lie ahead. We expect to close the transaction with PSA by the end of this The above operating results led the company to achieve a full-year Adjusted net proft year or in early 2021. In the meantime, we will maintain our focus on the fawless delivery of €4.3 billion and net proft from continuing operations of €2.7 billion. These results also of our commitments. drove Industrial Free Cash Flows of €2.1 billion. Among the other highlights of the year: On the basis of these strong results, the Board of Directors recommended the payment of an ordinary dividend of €1.1 billion to our shareholders, as previously indicated. • We fnalized the sale of Magneti Marelli, which not only signifcantly strengthened our balance sheet, but also allowed the Group to distribute a €2.0 billion extraordinary Delivering such strong results is important to support the substantial investments we are dividend to our shareholders. making in future products, technologies and facilities. • We strengthened our network of partnerships to develop e-mobility solutions for electric During 2019 we committed to key projects that are fundamental to our future, and will vehicles by executing agreements with Enel X and ENGIE in Europe, for both home further strengthen our business in the years ahead. charging stations and public charging networks. • With a focus on improving our effciency and speed to market, we streamlined our Global Product Development team by bringing together vehicle and powertrain engineering Message from the Chairman and CEO Message from under a single, global organization. • We entered into an agreement to sell our cast iron components business operated through Teksid; this is another important step in the implementation of our supplier business plan and will allow the business to be further developed by a leading player in the cast iron industry. SUSTAINABILITY REPORT SUSTAINABILITY Message to Stakeholders 2019 5 We also strengthened our product offering with several key launches, including: As part of our sustainability focus, we also provided signifcant support through the FCA Foundation for an ambitious and innovative project supporting scientifc education and • The all-new Ram Heavy Duty, which was awarded Motor Trend’s 2020 Truck of the Year, outreach to be launched by CERN in Geneva with the Science Gateway, which is expected on the back of the Ram Light Duty winning the previous edition of the award.