Fiat Chrysler Looks To Pass Ford in Profit -- WSJ
January 26 2018 - 3:02AM
Dow Jones News
By Chester Dawson
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 26, 2018).
DETROIT -- Fiat Chrysler Automobiles NV said Thursday it nearly
doubled its earnings in the latest quarter, moving the auto maker
closer to its ambitious growth targets and surpassing the
profitability at rival Ford Motor Co.
The strong results are a sign of the company's revival after
emerging from bankruptcy almost a decade ago and the merger with
Fiat under the Italian auto maker's chief executive, Sergio
Marchionne.
Mr. Marchionne, who plans to step down early next year, said he
expects Fiat Chrysler will meet its profit and debt targets for
2018 and continue to perform well under his yet-to-be-named
successor.
"FCA is positioned to be a top performer," he said on a
conference call with financial analysts, adding that the company
will lay out new goals for the next four years on June 1.
Fiat Chrysler's fourth-quarter net profit rose 97% from a year
earlier to EUR804 million ($997 million), even as revenue fell 3%
to EUR28.9 billion. The company said its adjusted operating profit,
which excludes one-time items, rose 22% to EUR1.89 billion, driven
by sales of Jeep SUVs and Ram pickup trucks. The improvement was in
line with a FactSet consensus of analyst forecasts.
That helped boost Fiat Chrysler's group profit margin to 6.4%,
above Ford Motor's 5% global margin last year. General Motors Co.,
which has yet to report its full-year results, sported a 9% profit
margin through three quarters.
Mr. Marchionne needled Ford on the call with analysts, saying
Fiat Chrysler is poised to beat its crosstown rival's earnings this
year.
"There's a very strong likelihood we will outperform Ford in
terms of operating earnings in 2018," he said.
On Wednesday, Ford posted a 19% decline in fourth-quarter
operating income to $1.7 billion.
Fiat Chrysler's share price has surged in recent months, and is
up 37% so far this year while Ford's has dropped nearly 7%. Shares
of Fiat Chrysler rose 0.8% to $24.33 on Thursday.
Ford, with sales of 6.6 million vehicles globally last year and
a stock market value of $47.9 billion, is still bigger than Fiat
Chrysler, which shipped 4.7 million vehicles last year and has a
market capitalization of $46.9 billion.
Fiat Chrysler's revenue in North America, the auto maker's
largest market, fell 5% in the fourth quarter to EUR16.8 billion,
but its adjusted operating profit margin in the region rose to
8.0%, up from 7.1% a year earlier thanks to demand for lucrative
Jeeps and Ram trucks.
Fiat Chrysler's market share in the U.S. shrank to 10.8%, from
11.7% a year before and 13.3% in the same quarter of 2016. That
reflects a move to reduce lower-profit-margin fleet sales and to
abandon some segments such as entry-level sedans.
The company's market share in China, the world's largest auto
market, was just 0.8%, nearly unchanged from 0.9% in 2014.
The Italian-American auto maker's goals 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.
The company first set 2018 targets four years ago, then raised them
in 2016. On Thursday, the company forecast full-year net revenue of
EUR125 billion, adjusted net profit of EUR5.0 billion and net
industrial cash of EUR4.0 billion.
Fiat Chrysler is in the midst of rapidly expanding production
capacity for larger SUVs and pickup trucks, even as it has canceled
production of smaller vehicles such as the Dodge Dart, Chrysler 200
and Jeep Patriot. It is counting on continued strong demand in the
U.S. as it rolls out several new models, including the latest
iterations of its Jeep Wrangler and Cherokee, as well as a restyled
Ram 1500.
Richard Palmer, the company's chief financial officer, told
analysts that increasing light-truck output is critical for meeting
its full-year financial goals. "Key to our ability to reach these
targets is the execution of production ramp-ups in the first half
of the year," he said.
Write to Chester Dawson at chester.dawson@wsj.com
(END) Dow Jones Newswires
January 26, 2018 02:47 ET (07:47 GMT)
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