Fiat Chrysler Posts Loss, Putting Peugeot Deal Under Pressure -- Update
July 31 2020 - 9:14AM
Dow Jones News
By Eric Sylvers
MILAN -- Fiat Chrysler Automobiles NV reported a second-quarter
loss, putting pressure on the Italian-American auto giant to
improve its performance or risk a renegotiation of the terms of its
merger with Peugeot maker PSA Group.
Like with most car makers, Fiat Chrysler's profit and revenue
plunged in the quarter as lockdowns in its main markets halted
production and kept consumers at home. But the company posted a
small profit in North America, in part due to cost cuts in areas
such as advertising and as workers were furloughed.
PSA, in contrast, posted a profit in the first half -- the
French company reports earnings twice a year -- showing how Chief
Executive Carlos Tavares's cost cuts and reorganization in recent
years are bearing fruit. He has said the question of whether the
merger terms will be adjusted can only be addressed when it is
clear how well the two companies have emerged from the coronavirus
crisis.
The pandemic has battered the earnings of companies across
almost all industries and many executives have said that it remains
too early to say how quickly a recovery will come. The U.S. and
European economies notched record contractions in the second
quarter. Some analysts have said that Italy and some other European
economies could take several years to regain the ground lost in the
past few months.
The two companies have said the deal is on track to be concluded
by the end of March, even with the European Union carrying out an
extensive antitrust investigation. Fiat Chrysler on Friday
reiterated the merger timetable. The new company will be called
Stellantis and will retain the two companies' existing brands.
In the second quarter, Fiat Chrysler's net loss was EUR1.04
billion, compared with a profit of EUR793 million in the same
quarter last year. Revenue fell 56% to EUR11.7 billion from EUR26.7
billion.
Adjusted operating profit in North America was EUR39 million,
down from EUR1.57 billion a year earlier. The result beat Fiat
Chrysler's Detroit rivals, with Ford Motor Co. losing almost $1
billion in North America in the April-to-June period and General
Motors Co. posting a small loss.
Fiat Chrysler said all plants in North America, Latin America
and the Asia-Pacific region are operating at pre-pandemic levels.
The company has been ramping up production more slowly in Europe
over the past few months and is slated to reach pre-pandemic levels
by the end of September.
The company said it hasn't faced any recent problems with its
supply chain, something that hampered production earlier in the
year when the coronavirus had engulfed China but hadn't yet spread
widely to North America or Europe.
Write to Eric Sylvers at eric.sylvers@wsj.com
(END) Dow Jones Newswires
July 31, 2020 08:59 ET (12:59 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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