Fiat Chrysler Q1 profit surges on strong Jeep sales
Strong global Jeep sales helped Fiat Chrysler post record first-quarter global earnings despite continued weakness in in Latin America and Asia.
Net income rose to 478 million euros ($539 million), the automaker said on Tuesday.
FCA said its first-quarter adjusted earnings before interest and taxes (EBIT) nearly doubled to $1.56 billion in the quarter.
Shipments of Jeep climbed 15 percent in the quarter to 326,000 units as the automaker expands the SUV brand globally.
Net global revenues climbed 3 percent to $30 billion, at today’s exchange rate, though total shipments declined 1 percent to 1,086,000 vehicles.
FCA said its profit margin in North America, its largest market, doubled to 7.2 percent from the same quarter last year, while the profit margin in Europe, the Middle East and Africa quadrupled to 1.9 percent.
• Download Fiat Chrysler's Q1 results as a PDF, below.
The company was profitable in Latin America, earning $12.4 million in the region despite a 24 percent drop in shipments and a 15 percent drop in revenues. The profit in Latin America compares to a $73.3 million loss in today’s dollars during the same quarter last year.
In its Asia Pacific region, FCA’s profits dropped 82 percent to $13.5 million on a 47 percent drop in shipments and a 37 percent drop in revenues.
The company confirmed its guidance for the year, predicting that it would end 2016 with more than $124 billion in net revenues, more than $2.14 billion in profits and net industrial debt of less than $5.64 billion, at today’s exchange rate.
FCA said its net industrial debt rose to $7.45 billion from $5.75 billion on seasonality and the impacts of foreign exchange rates. FCA is the only major automaker with a net industrial debt. The company's higher debt disappointed the markets, pushing shares lower. In morning trading, FCA shares fell 3.3 percent to $7.91.
Merger bid 'worthwhile'
After calling off efforts to pursue a merger with General Motors Co., Fiat Chrysler CEO Sergio Marchionne has made eliminating debt his highest priority before he leaves the post at the end of 2018. Achieving the goal would put Fiat Chrysler in a better position to find a partner. Marchionne contends that the auto industry wastes too much money and needs to consolidate to finance investment in new technology.
Marchionne said that the Capital Junkie presentation in April 2015 -- which advocated greater consolidation among automakers -- had been productive, though it hadn’t yet borne fruit. “I think we need to give it more time. In the absence of somebody immediately embracing the concept, I think it would take time,” he said. “It has been worth the effort, and I would do it again.”
He said he continues to have discussions on the topic with other automakers. “I remain hopeful that somebody will pick it up with us and get it done,” Marchionne said.
Marchionne also said that, while FCA’s net debt rose in the quarter, the company had too much “unproductive” cash parked on its books. He said the company remained on target to be in a net cash position -- to have more cash on hand than outstanding debt -- by the beginning of 2018.
Bloomberg and Reuters contributed to this report