F Ford Motor Company

By Chester Dawson 

DETROIT -- Fiat Chrysler Automobiles NV said Thursday its earnings rose 60% in the first quarter on strong sales of its most profitable vehicles, keeping its margins above rival Ford Motor Co.

The Italian-American auto maker said it was on track to meet its growth targets for the year, including a pledge to pay off its rapid declining net industrial debt load. That would mark Fiat Chrysler's full recovery after Chrysler's bankruptcy a decade ago and a validation of the merger with Fiat.

"Over all, the indications are that the business is in good shape," Chief Executive Sergio Marchionne said on a conference call with analysts.

Fiat Chrysler's fourth-quarter net profit came to EUR1.02 billion ($1.24 billion), even as revenue fell 2% to EUR27 billion. The company said its adjusted operating profit, which excludes one-time items, grew 5% to EUR1.6 billion, which brokerage Evercore ISI said was below a consensus forecast of EUR1.8 billion among financial analysts.

The auto maker said the biggest drivers of its earnings growth were higher net pricing and increased sales of high-profit margin vehicles, particularly new versions of its Jeep Wrangler SUV and Ram 1500 pickup truck. That boosted Fiat Chrysler's global margin to 6% in the first quarter, up from 5.5% a year before and above Ford's 5.2% margin. General Motors Co.'s margin was 7.2%.

Mr. Marchionne, who plans to step down early next year, said he expects Fiat Chrysler will pay its off debt and move to a cash positive position this year. The company is planning to announce a new set of growth targets in June, but won't name Mr. Marchionne's successor until sometime in early 2019.

The CEO said he was disappointed with a slow ramp-up in production of the new Ram truck, and higher-than-expected launch costs, which dragged down profit in North America, its largest market. But Mr. Marchionne said those difficulties were a temporary setback.

The company said operating profit adjusted for one-time items in North America fell 2% on the year to EUR1.21 billion in the first three months, with launch costs alone hitting EUR300 million in the quarter.

Fiat Chrysler's stock price rose 2.8% to $23.48 in premarket trading Thursday on the New York Stock Exchange, but the shares have more than doubled over the past year.

The company first set 2018 targets four years ago, then raised them in 2016. Those goals are for 2018 are revenue of EUR136 billion, adjusted net profit of between EUR4.7 billion and EUR5.5 billion, and net industrial cash of at least EUR4 billion.

On Thursday, the company confirmed its current full-year net revenue forecast of EUR125 billion, adjusted net profit of EUR5.0 billion and net industrial cash of EUR4.0 billion. It said net industrial debt on March 31 stood at EUR1.31 billion.

Max Bernhard contributed to this article.

Write to Chester Dawson at chester.dawson@wsj.com

(END) Dow Jones Newswires

April 26, 2018 09:44 ET (13:44 GMT)

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