Fiat Chrysler reports $659M profit in 3Q
Fiat Chrysler Automobiles NV on Tuesday reported a profit of about $659 million (606 million euros) during the third quarter, despite recall costs and lower sales in North America, its largest market.
The Auburn Hills automaker’s global sales fell 1 percent compared to the same period a year ago, but positive results in three of its four global regions put it in the black. As a result, executives on Tuesday raised its guidance on some of its full-year financial targets.
“Third quarter financial results were strong,” Richard Palmer, the company’s Cief Financial Officer said. “We had our best Q3 ever for adjusted earnings before interest and taxes and our best adjusted net profit ever.”
FCA said its adjusted earnings before interest and taxes rose 29 percent to $1.63 billion (1.5 billion euros). Its adjusted net profit rose to about $803 million (740 million euros).
Most of its money was made in North America, where its adjusted earnings for the second quarter were about $1.39 billion (1.28 billion euros), a slight increase from $1.29 billion (nearly 1.186 billion euro) during the same time from 2015. FCA attributed the increase to positive net pricing.
Shipments of vehicles in North America fell 8 percent, from 685,000 in the third quarter of 2015 to 627,000 this quarter, thanks in large part to the discontinuation of the Chrysler 200 and Dodge Dart. Net revenue declined 5 percent to $18.30 billion (16.810 billion euros) because of those lower shipments and a higher fleet mix.
FCA also took a $162 million (149 million euro) hit from “a recall for which there is ongoing litigation with a component supplier.” FCA feels the supplier has responsibility for the recall.
The automaker achieved 7.6 percent profit margins in North America this quarter, up from 6.7 percent during the same quarter a year ago. CEO Sergio Marchionne hopes to increase that number to double digits in the coming years.
By 2018, FCA hopes to have Cherokee up and running in Belvidere, Illinois; the new Ram 1500 in Sterling Heights; and the new Jeep Wrangler in Toledo, Ohio.
Marchionne said it’s his “sincere expectation that we’ll be able to achieve double-digit margins in NAFTA,” once that happens.
“I think the transformation should allow us to effectively yield best in class margins in NAFTA, and that remains a key objective,” he said.
After ending production for the Dart and 200, Marchionne said the automaker continues to look for a partner to build its passenger cars.
“It’s a matter of time,” he said. “We will find somebody.”
North America was followed by Europe, where adjusted earnings significantly increased from $21.7 million (20 million euros) to $113 million (104 million euros), as well as components which grew to $121.9 million (112 million euros) from $106.6 million (98 million euros). Maserati made $112.1 (103 million euros), up from $13.06 (12 million euros).
The company also made money in its Asia Pacific region, with an adjusted earnings of $22.86 million (21 million euros) after a $90.34 million (83 million euro) loss at the same time a year ago. It attributed that increase to a favorable mix on imported vehicles, lower net pricing and improved results in China.
FCA lost money in South America, where its adjusted earnings before interest and taxes were a negative $17.4 million (16 million euro) compared with a profit of 30 million (28 million euro) during the same period a year ago.
“The market continues to be tough in Brazil,” Palmer said.
The company maintained its 2016 guidance on net revenue to greater than $123.1 billion (112 billion euros). It raised its adjusted earnings before interest and taxes to greater than $6.3 billion (5.8 billion euros) from greater than $5.99 billion (5.5 billion euros). It also raised its adjusted net profit to greater than $2.5 billion (2.3 billion euros) from greater than $2.18 (2 billion euros).
It also confirmed guidance on net industrial debt to less than $5.44 billion (5 billion euros).
FCA’s crosstown rival, General Motors Co. on Tuesday reported record third-quarter earnings of $2.77 billion, up 104 percent from the same months a year ago. Ford Motor Co. will report earnings on Thursday.