Fiat Chrysler earnings up as Jeep, Ram soar
Fiat Chrysler Automobiles said Tuesday it earned a profit of $659 million during the third quarter as its net income improved in three out of four global regions.
The automaker's profit compares with a loss of $421 million last year when the automaker took a massive one-time charge to cover the cost of future recalls and to cover the cost of vehicles lost from explosions in a port in Tianjin, China.
The company said it earned 47 cents per share, easily beating analyst expectations of 39 cents per share.
FCA's profits improved even as its shipments of new cars and trucks dropped 1% to 1.12 million.
The automaker's profits improved in North America, Europe and China as sales of cars fell and sales of its Jeep and Ram brand, which command higher transaction prices and profits, increased. FCA has stopped making its Dodge Dart compact car in Belvidere, Ill. and plans to stop producing the Chrysler 200 in Sterling Heights, Mich., in December.
FCA's total revenue remained essentially flat at $29.2 billion.
With its profit margins improving, FCA increased its profit outlook for the year. FCA now expects to earn an operating profit of $6.3 billion, up from its previous guidance of $5.9 billion.
The automaker also got a boost from Maserati, its Italian luxury brand. Maserati's profits before interest and taxes soared to $112 million compared with just $13 million for the same period a year ago.
Maserati's profits increased mostly due to the launch of the Levante in Europe. The Levante is the luxury Italian brand's first ever SUV. FCA CEO Richard Palmer said FCA shipped more than 5,000 Levante SUVs during the third quarter.
"We still have a very strong order backlog for Levante, so we expect to see the momentum for Levante continue into the fourth quarter," Palmer said.
In North America, FCA's earnings before interest and taxes increased 8% to $1.4 billion as the company sold a higher percentage of trucks and SUVs. In North America, FCA has decided to stop making compact and midsize cars, deciding instead to focus even more heavily on its Ram truck and Jeep SUV brands.
That decision led to a decrease of 45,000 in cars sold for the three months ending Sept. 30.
FCA's profit margin in North America increased to 7.6%, up from 6.7% for the same period last year. FCA CEO Sergio Marchionne has been trying to find a way to boost the automaker's profit margin in North America to 10% or higher to match profit margins regularly achieved by crosstown rivals Ford and General Motors.
In Europe, FCA's profit's before interest and taxes increased to $113 million compared with a profit of $21.7 million.
In Southeast Asia, FCA's profits before interest and taxes increased to $22.8 million compared with a loss of $90 million. FCA's profits in Southeast Asia were driven by a 76% increase in Jeep sales through its joint venture with Guangzhou Auto.
South America was the only global region where FCA reported a loss. In South America, FCA along with all automakers continue to deal with declining industry sales caused by Brazil's faltering economy.
FCA's profits before interest and taxes fell to a loss of $17.4 million compared with a profit of $30 million.
Follow Paste BN reporter Nathan Bomey on Twitter @NathanBomey.