Europe's automakers boosted shareholder value 41% in first quarter

The latest Automotive News Europe/PricewaterhouseCoopers Transaction Services Shareholder Value Indices reveal that while European and U.S. stock markets surged ahead in the first three months this year they were outpaced by listed automotive companies, which extended strong gains made in the last quarter of 2014.

The average shareholder value of Europe's listed automakers improved by 41 percent and the value of auto retailers by 17.9 percent in the first quarter. Suppliers, which had achieved the greatest growth in Q4 last year, gained a further 26.6 percent in Q1.

These results are all well ahead of the gains enjoyed by European stock markets in the first three months, over which time period the German DAX 30 rose 22 percent, the French CAC 40 rose 18 percent and the UK's FTSE 100 gained 11.8 percent.

Fiat Chrysler leads the way again

For the third consecutive quarter Fiat Chrysler topped the list of automakers, gaining 57.8 percent in Q1 this year. It was followed by Peugeot, up 52.5 percent, and Renault, which rose 40 percent. The weakest performance in an extraordinary quarter was a 29.7 percent gain by BMW.

A number of factors have bolstered Fiat Chrysler's fortunes. It reported EBIT of 3.2 billion euros for 2014, a rise of 9 percent at constant currencies compared with 2013, while revenues rose 12 percent to 96 billion euros. Strong U.S. car sales, due to falling fuel prices and an accelerating economy, have also helped, with January year-on-year sales of Jeep up 23 percent. The Italian-American carmaker also recorded a quarterly operating profit in Europe for the first time since the financial crisis and expects to achieve full-year profitability in the region this year, 12 months ahead of target.

Peugeot’s operating profit in 2014 of 905 million euros compared with a previous year loss of 364 million euros and is the French company's first full-year operating profit since 2010. This was attrributed largely to CEO Carlos Tavares' success in cutting costs and achieving price increases. The 3 billion euro capital increase last year that brought in Dongfeng Motor as a strategic partner also helped lift Peugeot's sales in China by 32 percent to 734,100 vehicles.

“The results indicate that the growth in 2014 is continuing into 2015, with the rest of the EU finally turning the corner following the financial crisis,” said Jason Wakelam, PwC Transactions Automotive leader.

Pininfarina takeover

Italian companies were some of the biggest winners in the automotive supplier sector. Fueled by takeover talks, design and engineering specialist Pininfarina recorded an 80.8 percent increase in shareholder value. It was followed by Italian filtration and suspension systems specialist Sogefi (+47.5 percent), Swiss-headquartered noise control and thermal insulation specialist Autoneum (+46.5 percent) and Italian brake systems specialist Brembo (+37.3 percent).

Pininfarina had a positive year, announcing sales rose 7 million euros to 87 million euros in 2014 and reduced net losses, down from 10.4 million euros in 2013 to 1.3 million euros. But the debt-burdened company's confirmation that it is in talks with Mahindra & Mahindra that could lead to a takeover by India’s largest maker of SUVs saw Pininfarina’s shares leap 26 percent in just one day at the end of March. The Italian firm's share price has virtually doubled since the start of the year.

Autoneum announced 2014 full-year results showing sales growth in almost all regions and a significant rise in net profit. Its earnings before interest, taxes, depreciation and amortization (EBITDA) margin exceeded 10 percent for the first time. Profitability was attributed to enhanced capacity utilization at existing plants in Europe, expansion of vertical integration through in-house production of basic materials and higher production volumes in Asia.

Elsewhere in the parts sector performances were mixed, with most companies achieving double-digit percentage gains. At the bottom of the list were the French cylinder head manufacturer Montupet, up just 0.1 percent, and German gasket and plastic components manufacturer ElringKlinger, down 2.2 percent.

“Suppliers are clearly benefitting from the continuing increase in new-car demand, making them attractive for M&A activity,” Wakelam said.

Retailers rise

Sweden's largest dealer group, Bilia, led the way among auto retailers in the quarter. It gained 32.7 percent on the strength of improved sales and operating profits, the acquisition of a large Toyota/Lexus dealership in Norway and news of its decision to pull out a money-losing Danish operation.

Leading UK car dealer Pendragon, which has 227 outlets across the UK, improved by 29.5 percent in the quarter. On the strength of a 36 percent increase in pre-tax profits for 2014 to 60 million pounds, the company has proposed a doubled final dividend and says it also expects to double the interim payout for 2015.

Against the trend, Stern Groep's decision not to pay a dividend for 2014 resulted in a 5 percent decline in the shareholder value of the Netherlands' largest car dealer. Although the company made a profit of 3.6 million euro in 2014, this was mainly due to a tax credit.

“The results for retailers reflect the uptick in demand for new vehicles across Europe,” Wakelam said, “combined with the retailers’ ability to offer relatively cheap finance packages to consumers, as interest rates remain low.”