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Fiat Chrysler Q1 profit drops 47% as lower shipments hurt revenue

Fiat Chrysler Automobiles (NYSE: FCAU) reported a 47% dip in earnings for the first quarter of 2019 due to the non-repeat of parallel production of the previous generation Jeep Wrangler alongside the new model and transitioning to its new commercial strategy in EMEA.

Net profit plunged by 47% to EUR 508 million and earnings plummeted 48% to EUR 0.32 per share. Adjusted net profit tumbled by 41% to EUR 570 million and adjusted earnings dipped by 42% to EUR 0.36 per share. The results came in line with the company’s forecast.

Net revenues declined by 5% to EUR 24.48 billion. The worldwide combined shipments decreased by 14% to 1,037,000 units, primarily due to non-repeat of overlapping all-new and prior generation Jeep Wrangler production and planned realignment of commercial strategies in Europe.

Image Courtesy: Fiat Chrysler Automobiles

For fiscal 2019, the management confirmed its adjusted earnings guidance to be above EUR 2.70 per share, excluding Magneti Marelli. Adjusted EBIT is still predicted to be above EUR 6.7 billion and industrial free cash flows are still anticipated to be above EUR 1.5 billion.

For the first quarter, shipments in North America dropped by 14% primarily from lower Jeep volumes due to non-repeat of overlapping Jeep Wrangler models, as well as lower Chrysler and Dodge volumes, partially offset by higher Ram volumes. In APAC, combined shipments plunged by 30% primarily in China, and consolidated shipments decreased by 11% mainly from decreased India and Australia volumes.

Also read: Ford Q1 earnings results

In EMEA, combined and consolidated shipments both down 12% primarily due to planned optimization of sales channel mix, partially offset by increased Jeep volumes. In LATAM, shipments declined by 9% due to Argentina market decline, partially offset by higher volumes in Brazil. In MASERATI, shipments tumbled by 41% partially due to planned inventory management actions.

The company said the launches of the all-new Ram Heavy-Duty and Jeep Gladiator are on track and generating enthusiastic responses from the market. These products will contribute to volume and margin expansion in North America, particularly in the second half of the year. At the Geneva International Motor Show, the Group unveiled two Jeep PHEV models slated initially for the EMEA markets beginning early 2020, as well as a new Alfa Romeo compact SUV concept and a high-tech, modular and electrified Fiat concept.

Also read: General Motors (GM) Q1 earnings results

In the US, the company announced plans for a major industrial investment that will support the introduction of two new Jeep-branded “white-space” SUVs, both with electric powered variants. Similarly, the confirmation of the previously announced manufacturing investment in Italy will accelerate the introduction of key PHEV and BEV products in the EMEA markets.

The sale of Magneti Marelli was completed on May 2, 2019, resulting in cash proceeds of EUR 5.8 billion. The board of directors approved an extraordinary cash distribution of EUR 1.30 per share, or about EUR 2 billion, to be paid on May 30, 2019, to shareholders of record on May 21, 2019, with an ex-dividend date of May 20, 2019.

Shares of Fiat Chrysler ended Thursday’s regular session down 0.33% at $15.04 on the NYSE. Following the earnings release, the stock inched up over 1% in the premarket session.

 

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