Fiat Chrysler Automobiles on Tuesday posted a first-quarter loss of $1.84 billion from continuing operations and projected worse results in the second quarter as the coronavirus pandemic tanked sales and shuttered its plants.
The automaker withdrew its financial guidance for the year and said it might need to raise more capital to strengthen its balance sheet ahead of a planned merger with PSA Group of France. FCA said it remained committed to the merger, which would create the world’s fourth-largest automaker.
"Together, we continue to push ahead on the various merger workstreams and we remain committed to completing the transaction by the end of this year or early 2021," the company said in a statement.
In the first quarter, FCA's net revenue declined 16 percent to $22.3 billion. The automaker reported adjusted earnings of $56.3 million before interest and taxes, down 95 percent from the first quarter of 2019. Adjusted earnings before interest and taxes fell 95 percent from the first quarter of 2019, to $56.3 million.
North American earnings plunged 48 percent to $594 million as the virus stopped U.S. production in the last two weeks of the quarter. Net revenue in North America was down 9 percent to $15.7 billion, and shipments in the region were down 16 percent.
Worldwide combined shipments fell 21 percent to 818,000 "due to temporary suspension of production in all regions and disrupted global demand," the company said.
"Throughout this unprecedented adversity, FCA's first priority has been the health and safety of its employees and communities," FCA CEO Mike Manley said in a statement. "The pandemic has had, and continues to have, a significant impact on our operations."
The automaker said more than 90 percent of its dealers in North America are currently open for sales or able to sell online.
"It will be a patchwork quilt across the country because some areas are able to sell much more effectively than others, but what it does mean is that [we] bring our plants up with a much higher level of dealer orders than people maybe expect,” Manley said on the company’s earnings call.
Sales of FCA’s Ram pickups have been particularly strong in the U.S., aided by generous no-interest financing deals, and Manley said he expects demand for them to remain relatively high in May. FCA aims to reopen most of its North American plants May 18 so it can begin replenishing dwindling dealer inventories of pickups and other vehicles. FCA said its U.S. pickup inventories stood at 420,000 after April.
"When you get down to that level of inventory, given the number of configurations on trucks, you're bound to be running short of certain high volume truck configurations,” Manley said, “and I think that's reflective of the number of dealer orders that we've received over the last few weeks, that are just obviously waiting there for our plants to restart.”
Manley is expecting U.S., Europe and Latin America markets to recover at different speeds. The China market, he said, is coming back quicker than expected.
"So far, the drop in the U.S. has not been as deep as people expected," Manley said. "I think what you will see is intervention in the U.S., not aimed specifically at our industry, but I think you will see intervention in the U.S. in terms of getting the economy restarted again."
Manley also believes Italy, which took a heavy blow from COVID-19, will surprise people with the way it bounces back as it "progressively reopens." He said the plan there will be "having the discipline to build to demand."
Fiat Chrysler shares closed Tuesday's trading in New York down less than 1 percent to $8.23.
