DETROIT -- Fiat Chrysler Automobiles today reported adjusted earnings before interest and taxes of 1.5 billion euros ($1.63 billion) for the third quarter, up 29 percent, on flat revenues and despite some headwinds in North America, its largest market.
The company said its net income improved to $659 million this year after a surprise loss during a same quarter a year ago that was the result of a $667 million charge for regulatory and recall costs.
Sales were largely flat in the quarter at $29.1 billion.
The world’s seventh-largest automaker -- and the only major automaker with more outstanding debt than cash -- saw what its leaders said was a “seasonal” increase in its net debt position in the quarter to $7.07 billion. But both CFO Richard Palmer and CEO Sergio Marchionne predicted net debt would fall below $6.5 billion by year’s end on plans to use $1.63 billion in cash to pay down outstanding debt by the end of the year.
FCA said its overall profit margin had grown to 5.6 percent, while its North American profit margin rose to 7.6 percent, both of which still lag behind its two competitors in Detroit.
In extended comments to analysts, Palmer and Marchionne said the company’s sales in Canada were being hurt by the falling Canadian dollar, while the same currency devaluation was helping make its operations there more competitive. FCA said its Canadian market share has plummeted to 12.6 percent from 15 percent a year ago.
“The alarming situation is Canada,” Marchionne said. “We were market leader up to the first half, in terms of share. But we’re not out to chase volumes just to get numbers into the fold here.”
Marchionne said FCA’s now-ratified four-year labor agreement with Unifor, the union representing FCA’s hourly workers in Canada, was constrained by the bargaining pattern set by General Motors. However, he said that FCA’s operations there were “competitive,” despite higher labor costs, because of the falling Canadian dollar.
In terms of products and the company’s ongoing changeover of its North American manufacturing capacity, Marchionne said that:
Asked about growing pickup incentives, Marchionne said FCA’s forays since August have been targeted as specific segments of existing dealer pickup inventories, and that FCA needed “to sharpen the focus of the intervention.”
Marchionne also said that there would be no sale of the company’s components subsidiaries, Comau or Magnetti Morelli, in the fourth quarter, but declined to comment on whether such a sale could occur after that.
Bloomberg and Reuters contributed to this report.
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