Fiat Chrysler defies slowdown thanks to North America performance
MILAN (Reuters) - Fiat Chrysler (FCHA.MI) (FCAU.N) took the market by surprise by sticking to its full-year profit guidance on Wednesday after a strong performance from its RAM pick-up brand in North America helped it to defy an industry slowdown.
A broad-based auto sales downturn has rattled the sector, forcing FCA’s competitors - including Renault, Daimler (DAIGn.DE) and Aston Martin (AML.L) - to cut their sales forecasts after second-quarter results, while U.S. carmaker Ford (F.N) gave a weaker-than-expected 2019 profit outlook.
Japan’s Nissan, a long term partner of Renault, said it would cut 12,500 jobs by 2023 after its earnings collapsed.
In its first earnings release since a failed attempt to merge with France’s Renault (RENA.PA), FCA said it was confident its adjusted earnings before interest and tax (EBIT) would top last year’s 6.7 billion euros ($7.5 billion).
The confirmation of the outlook initially sent Milan-listed shares in the Italian-American automaker, whose other brands include Jeep, up over 4% and they were 3.33% higher by 1136 GMT.
In the second quarter the group’s adjusted EBIT totalled 1.52 billion euros, versus analysts’ expectations of 1.43 billion euros, according to a Reuters poll.
FCA’s U.S. shipments were down 12% in the second quarter but the group said that the successful performance of its RAM brand resulted in an enhanced share of the large pick-up truck market of 27.9%, up 7 percentage points from last year.
Adjusted EBIT margin in the U.S. rose to 8.9% from 6.5% in the first quarter. FCA also cited the group’s strong performance in Latin America to support its confidence in the outlook for the year.
Margins also turned positive in Europe, the Middle East and Africa, to 0.4%, after the region lost money in the previous quarter.
The company said it would continue to focus on the underperforming areas of its business in the second part of the year, including Maserati and the EMEA region.
For the EMEA region “we continue to target increased margins through the impact of restructuring actions, better management of channel mix, and targeted product strategies,” FCA said.
Chief Executive Mike Manley said earlier the European region would return to profitability with margins of around 3 percent by the end of 2019.
But new models such as full-electric 500 mini car and hybrid versions of Jeep and Maserati SUVs are not expected to hit the market before next year.
Reporting by Giulio Piovaccari; Editing by Keith Weir
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