Fiat Chrysler Automobiles on Thursday posted record adjusted earnings of $2.2 billion in the third quarter, but one-time charges helped drag the results to a $200 million net loss.
FCA, which earlier Thursday said it had agreed to a merger with PSA Group, achieved a record $2.3 billion operating profit in North America, a 4 percent increase
It attributed the increase to keeping costs in line and increased pricing as consumers opted for higher-trim level vehicles. Its North American margin climbed to an all-time high of 10.6 percent.
FCA said North American revenue was flat at $21.3 billion and shipments were down 11 percent, "primarily due to continued dealer stock discipline, partially offset by volumes of all-new Jeep Gladiator."
Globally, FCA's adjusted earnings rose 5 percent. Revenue declined 1 percent to $30.5 billion and shipments were down 9 percent.
"Our strong Q3 results, built on record North America profitability, put us in a position to deliver our full-year guidance and to further improve financial performance in 2020," FCA CEO Mike Manley said in a statement.
The adjusted results include a $795 million charge related to a settlement over FCA vehicles that exceeded diesel emissions standards.
Manley predicted record operating profit next year, possibly its last as an independent company before a planned merger with PSA.
The automaker expects to generate 7 billion euros ($7.8 billion) of earnings before interest and taxes in 2020, largely from steady pickup truck sales in North America, Manley told analysts on a call Thursday.
Europe, China losses
FCA's European business reported a loss, with shipments declining due to the discontinuation of the Fiat Punto and Alfa Romeo Mito, as well as lower Fiat volumes.
A potential combination with PSA could bolster the European business by expanding its foothold in the lucrative commercial vehicle business.
FCA registered a loss in its Asia-Pacfic region as shipments fell primarily from lower China joint-venture sales.
Manley has worked to reduce losses in Asia after new products in China failed to gain traction with consumers and sales of the luxury Maserati brand plunged amid the first downturn in China's market in a decade.
Manley said money-losing businesses in Europe and Asia will return to profitability next year independent of a merger with PSA.
Even as those businesses improve, Fiat Chrysler won’t be able to meet some financial goals set out last year in its mid-term plan as growth in some brands and markets has failed to meet earlier expectations.
“The 2020 targets are really not reflective of where the business is today,” Manley said.
FCA plans to spend 1.8 billion euros over the next three years to secure emissions-related regulatory credits, a portion of which will be paid to Tesla as a hedge, Manley said.
Alfa, Fiat scaled back
Manley said he is “encouraged’ by demand and pricing for electric vehicles in Europe, noting the company could become compliant with tightening emissions regulations in Europe by 2021.
Manley said the Maserati brand will have a renewed lineup by 2023 as the brand releases an array of electrified vehicles. The brand plans to introduce models that will “offer a range of autonomous driving capabilities, starting with Level 2 enhanced highway assist progressing to Level 3.”
The first electrified Maserati, FCA says, will be a hybrid electric Ghibli, which will be launched in 2020. A sports car is also coming in 2020.
“What’s clear is that the opportunity this represents for both companies is very compelling,” he said.
“A merger would bring together two strong, complementary businesses to produce a genuine global mobility leader. Exploring this combination is absolutely consistent with everything we have been saying for a long time about the need for smart industry consolidation,” he said.
While the talks continue, Manley said, “We are still very much focused on running our day to day business, and our attention to that will not change.”
Bloomberg contributed to this report