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Fiat Chrysler to discuss new ‘operational initiatives’

Michael Wayland
The Detroit News

First-quarter financial results are not expected to be the main point of discussion when Fiat Chrysler Automobiles NV releases its earnings on Wednesday.

Fiat Chrysler CEO Sergio Marchionne and other executives are expected to field questions regarding potential mergers, industry consolidation and low profit margins, among other things.

Those discussions are in addition to executives reviewing the financial results as well as “operational initiatives” in North America and the company’s “view on industry capital optimization,” according to a revised announcement about first-quarter earnings from Fiat Chrysler on Monday.

The company declined to elaborate on the discussion in advance of the call. But since the automaker was officially formed and started trading on the New York Stock Exchange in October, executives on numerous occasions have called for a consolidation of the auto industry, and analysts and investors have been critical of the company’s profit margins, which are reportedly significantly lower than crosstown rivals General Motors Co. and Ford Motor Co.

Fiat Chrysler earned 632 million euros (about $718 million) on revenue of 96.1 billion euros ($109 billion) in 2014. That compares to Ford turning a profit of $3.2 billion last year on revenue of $144.1 billion. GM, which was significantly hurt by recall costs last year, posted a $2.8 billion profit on $155.9 billion in revenue in 2014.

Last week, trade publication Automotive News reported Fiat Chrysler raised dealer invoice prices by 1 percent for Chrysler, Dodge, Jeep and Ram vehicles to spur profits. A company spokesman, in an email to The Detroit News, said the company doesn’t publicly discuss business with its dealers.

Whatever Marchionne and other executives discuss Wednesday besides financial results, it wouldn’t be unprecedented for the company to announce major news during an earnings call.

Last year, when announcing third-quarter results, it was announced Fiat Chrysler would be spinning off its prized Ferrari brand into its own company through a public offering in 2015 as part of a plan to raise 4 billion euros (about $5 billion) worth of capital.

Analysts estimate Fiat Chrysler will post first quarter earnings per share of 7 cents for the first quarter of 2015, with quarterly revenue of about $25 billion.

Ford on Tuesday reported first quarter earnings of $924 million, or earnings per share of 23 cents, on revenue of $33.9 billion. GM last week reported a $945 million profit, or 56 cents per diluted share, on revenue of $35.7 billion.

Regarding consolidation, Marchionne on numerous occasions has noted that he feels it is a necessity, and reportedly said a merger with GM or Ford would be “technically feasible.”

Executives with both Ford and GM have dismissed the idea of a possible merger with Fiat Chrysler.

“We laid out a very comprehensive plan that takes us through the early next decade, with milestones next year and beyond,” GM CEO Mary Barra said last week in response to an analyst question on the reports about Fiat Chrysler’s interest.

For 2015, Fiat Chrysler expects shipments of 4.8 million-5 million cars and trucks, up from 4.6 million in 2014; net income of 1 billion-1.2 billion euros ($1.14 billion-$1.36 billion); earnings before interest payments and income taxes (EBIT) in the range of 4.1 billion-4.5 billion euros ($4.6 billion-$5.1 billion); and net revenue of 108 billion euros ($122.7 billion).