Fiat Chrysler Automobiles on Wednesday posted net income of $1.4 billion in the third quarter, including a record profit in North America even as sales declined.
The automaker, in one of its final earnings reports before its merger with PSA Group is scheduled to close early next year, said it earned an adjusted $3 billion in North America, up 26 percent from a year earlier, a result of increased pricing and lower advertising costs. Although shipments in North America declined 8 percent, the company’s adjusted margin for the region rose to 13.8 percent from 10.6 percent a year earlier.
FCA’s global adjusted earnings before interest and taxes increased 16 percent to $2.7 billion -- another record -- as factories in North America and Europe largely returned to normal after the coronavirus disruption in the spring. Revenue fell 6 percent to $30.3 billion. The company’s net income compares with a loss of $210 million in the third quarter of 2019 resulting from several one-time charges.
“Our record results were driven by our team’s tremendous performance in North America,” CEO Mike Manley said in a statement. “Our team has proven its extraordinary resilience and creativity, and, as we close in on the merger ... we are stronger and more focused than ever on our mission to deliver great value for all our stakeholders.”
FCA reinstated its guidance for the year, projecting adjusted earnings of $3.5 billion to $4.1 billion, assuming no further disruptions from the pandemic. Through three quarters, the company has posted adjusted earnings of $1.64 billion.
Shares of FCA closed Wednesday's trading in New York down 4.9 percent to $12.28 amid an overall market decline.
Safety and well-being
“I want to stress that these results were achieved, whilst maintaining our first priority, which has been and will continue to be to ensure the safety and well-being of the FCA family and our communities,” Manley said Wednesday. “All of our plants are now back up and running on a multi-layer program with health and safety protocols and most of them now have returned to what I would call near pre-pandemic production levels.”
The company sold 507,351 vehicles in the U.S. in the third quarter, a 10 percent drop from the year-earlier period, with FCA saying that "strong retail sales offset much of the ongoing softness in fleet purchases."
The Jeep Wrangler had its best-ever U.S. sales in September, Manley said in a call with analysts. The Wrangler line is slated to get a plug-in hybrid version later this year that gets 25 miles of electric range. Manley said the move to electrification is a natural evolution of the brand.
In addition to announcing the Wrangler hybrid, FCA unveiled several more products in the third quarter: the 702 hp Ram TRX pickup, the Grand Wagoneer concept and the Maserati MC20.
North America vehicle shipments were down 8 percent to 554,000 units due to planned downtime at several plants. The Warren Truck Assembly plant in suburban Detroit was down 14 weeks to retool for the Wagoneer and Grand Wagoneer, while a Toluca, Mexico plant was down four weeks prepare for the freshened Jeep Compass.
The discontinuation of the Dodge Grand Caravan was another reason for the lower shipments.
The Ram brand was down 3 percent overall in the third quarter in the U.S., but retail sales were up 15 percent.
“Considering that the company only boasts one popular pickup compared to many from its Detroit 3 counterparts, it’s quite the impressive feat that just at the start of 2019, pickups made up less than a quarter of the company’s vehicle sales, and now they make up more than a third,” Jessica Caldwell, Edmunds’ executive director of executive insights, said in a statement.
Edmunds said FCA’s average transaction price in the U.S. rose 5.6 percent to $42,895 in the latest quarter compared with the same quarter last year.
In Latin America, net revenue slipped 30 percent to $1.7 billion. In Europe, the Middle East and Africa, net revenue remained flat at $5.4 billion, which FCA said was due to “lower volumes, partially offset by positive net pricing related to newly-launched electrified vehicles and favorable channel mix.”
Manley said the merger with PSA, creating the new entity called Stellantis, is on track to be completed by the end of the first quarter of 2021.
"We're obviously clearly excited about the future prospects of being part of Stellantis and we're even more convinced than ever the potential this landmark merger will give us," Manley said. "While the last quarter of the year will have its own set of challenges, we believe we can have a strong finish to the year successfully positioning us as we embark on this new era as a combined entity."