Fiat Group monitors its operations through the use of various performance indicators that may not be comparable to other similarly titled indicators of other companies. Group management believes these performance indicators provide comparable measures of its financial performance based on normalized operational factors, which then facilitate management’s ability to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions.
The Group’s key performance indicators are defined as follows:
- Trading Profit/(Loss) is computed starting with Net Revenues less operating costs (cost of sales, SG&A, R&D costs, other operating income and expenses).
- Earnings Before Interest, Taxes (“EBIT”) is computed starting from Trading profit/(loss) and then adjusting for restructuring costs, other income/expenses that are unusual in the ordinary course of business (such as gains and losses on the disposal of investments) and the Result from investments.
- Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) is computed starting with EBIT and then adding back depreciation and amortization expense.
- Net Debt is computed as debt plus other financial liabilities less (i) cash and cash equivalents, (ii) current securities, (iii) current financial receivables from jointly-controlled financial services entities and (iv) other financial assets.
- Net Industrial Debt is computed as debt plus other financial liabilities related to Industrial Activities less (i) cash and cash equivalents, (ii) current securities, (iii) current financial receivables from Group or jointly-controlled financial services entities, and (iv) other financial assets. Therefore, debt, cash and other financial assets/liabilities pertaining to Financial Services entities are excluded from the computation of Net Industrial Debt.
For presentation of the income statement, the Group uses a classification based on the function of expenses (otherwise known as the “cost of sales” method), rather than one based on their nature, as it is more representative of the format used for internal reporting and management purposes and is consistent with international practice in the automotive sector.