Fiat Chrysler Automobiles posted record adjusted earnings of $2.2 billion in the third quarter but one-time charges resulted in a $200 million net loss.
FCA, which earlier Thursday said it agreed to a merger with PSA Group of France, achieved a record $2.3 billion operating profit in North America, a 4 percent increase, which was attributed to cost controls and increased pricing as consumers opt for higher-trim-level vehicles. The automaker's North American profit margin climbed to an all-time high of 10.6 percent.
FCA said North American revenue was flat at $21.3 billion and shipments were down 11 percent, “primarily due to continued dealer stock discipline, partially offset by volumes of all-new Jeep Gladiator.”
Globally, FCA's adjusted earnings rose 5 percent. Revenue declined 1 percent to $30.5 billion and shipments fell 9 percent.
“Our strong Q3 results, built on record North America profitability, put us in a position to deliver our full-year guidance and to further improve financial performance in 2020,” FCA CEO Mike Manley said in a statement Thursday.
The adjusted results include a $795 million charge related to a settlement over FCA vehicles that exceeded diesel emissions standards.
The net loss for the quarter was largely a result of a $1.5 billion impairment charge related to rationalization of the company's European small-car product portfolio and the Alfa Romeo brand.
2020 guidance, merger
Looking ahead to 2020, Manley said he’s confident that FCA can build on 2019's earnings results. But there are some headwinds.
The company's Warren Truck plant in Michigan will have 14 weeks of production downtime that’ll begin late this year and run into the first quarter of 2020. There will also be higher regulatory compliance costs in North America.
One of the positives, Manley said, is that the company will get a full year of sales from the Ram Heavy-Duty pickups and Jeep Gladiator.
Manley is expecting the FCA Group to deliver record adjusted EBIT of $7.8 billion in 2020.
Speaking on the possible merger with PSA, Manley said both companies know each “very well,” but said there is still plenty of work to do before they reach a formal agreement.
“What’s clear is that the opportunity this represents for both companies is very compelling,” he said. “A merger would bring together two strong, complementary businesses to produce a genuine global mobility leader. Exploring this combination is absolutely consistent with everything we’ve been saying for a long time about the need for smart industry consolidation.”
While the talks continue, Manley said, “We’re still very much focused on running our day to day business, and our attention to that will not change.”
Manley shed some light on the future of the Ram 1500 Classic, the previous-generation model that FCA is aiming at value shoppers and commercial customers. He said the automaker has a good sense of the target market and has gotten the pricing right. He thinks the dual-truck strategy is working and made clear that the automaker will continue to produce the Classic.
The Warren Truck Assembly Plant that builds the Classic in suburban Detroit will have some downtime as it prepares to build new Jeep Wagoneer and Grand Wagoneer utility vehicles.
Manley said Maserati will have a renewed lineup by 2023 as the brand releases an array of electrified vehicles. The brand plans to introduce models that will “offer a range of autonomous driving capabilities, starting with Level 2 enhanced highway assist progressing to Level 3.”
The first electrified Maserati, FCA says, will be a hybrid electric Ghibli, which will be launched in 2020. A sports car is also coming in 2020.
Manley admitted frustration with how Alfa Romeo is performing. The brand's future product portfolio has been scaled back, he said, but the plan is for Alfa Romeo to maintain its premium position in the market.
The Giulia and Stelvio could get mid-cycle freshenings in 2021. Production on a new B-segment crossover starts in 2022, while a C-segment crossover will begin production in 2021. Both utility options will offer electrification.
Manley said the company is refocusing the portfolio on segments and markets where the brand has successfully competed in the past. He wouldn’t rule out the possibility of additional Alfa Romeo products past 2022 but he said that will depend on performance.
“While I fundamentally believe in the brand, we must make sure that any investments we make generate an appropriate return,” Manley said.