European Auto Manufacturers Dashboard 1H14

...FCF Generation to Moderate in 2014 Collective free cash flow (FCF) generation strengthened significantly in 2013 for the six largest auto manufacturers ¡ BMW AG, Daimler AG, Fiat Spa, Peugeot SA, Renault SA, Volkswagen AG ¡ with FCF margin (after dividends, according to Fitch's definition) becoming positive at 1%, from negative 0.3% in 2012. Only BMW's and Renault's FCF margin weakened, although it remained positive. Daimler's and Fiat's FCF margins turned positive while PSA's FCF absorption fell to 2% from 5.8%. The chief reasons for the improvement include stronger operating profit and favourable changes in working capital which offset the small increase in capex and slightly higher dividend payments. We expect the collective FCF margin to weaken moderately to 0.7% in 2014, based on our current assumptions of increasing dividends and working-capital needs. Higher payout ratios and working-capital absorption should offset the collective improvement in underlying operating margins and funds...

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