Fiat Chrysler Automobiles N.V. (FCAU) stock opened lower and remained grounded after an unexpected 35% dip in profit for the second quarter that was below analysts’ expectations. At the same time, investors were mourning for the loss of auto industry legend Sergio Marchionne, who rescued Fiat and Chrysler from bankruptcy. Former executive chief Marchionne has passed away at the age of 66 after sudden health deterioration due to surgery complications.
Adjusted profit for the second quarter declined 9% due to weaker performance in China, despite a 4% rise in revenue. Worldwide combined shipments rose 6% primarily helped by increases in North American Free Trade Agreement and Latin America.
The company’s results were also troubled by lower sales of its luxury Maserati nameplate due to import duties, lower shipments from the Chinese joint venture, and higher competition from domestic brands. In addition, the company lowered its full-year earnings outlook.
Mike Manley, who replaced Marchionne as CEO, opened the company’s call presentation with a minute’s silence. Higher incentive spending and a rise in unsold vehicle stocks hurt Chinese demand that fell in the quarter.
Meanwhile, Sergio Marchionne had fallen gravely ill and his health worsened after problems from shoulder surgery in late June. Last weekend, he was replaced as chief executive by Mike Manley, head of the Italian-American firm’s Jeep division. Marchionne was due to step down next year.
Marchionne was also replaced on Saturday as chairman and CEO of Ferrari, the race car maker that spun off from Fiat in early 2016.
Shares of Fiat Chrysler is trading down 14.57% at $16.47 on the NYSE. The stock had been trading between $11.54 and $24.95 for the past 52 weeks. The shares fell 7.7% for the year-to-date and more than 31% for the past six months.