Fiat Chrysler Automobiles N.V. (NYSE:FCAU) reported net income of 641 million euros ($698 million) for the first quarter, up 34% from a year ago, on good results in Europe and improvements in product mix around the world.
FCA's profit before interest and taxes (excluding special items) rose 11% to 1.54 billion euros ($1.67 billion), ahead of the 1.44 billion-euro average estimate among analysts surveyed by Bloomberg.
FCA's shares jumped over 4% in early trading after the news was released.
FCA earnings: The raw numbers
All financial results are in billions of euros except as noted. As of April 26, 1 euro was equivalent to about $1.09.
|Metric||Q1 2017||Q1 2016||Change|
|Shipments (millions of vehicles)||1.15||1.13||1%|
|Adjusted EBIT margin||5.54%||5.19%||0.35 ppts|
|Net profit (millions of euros)||641||478||34%|
The nutshell summary: Why FCA's profit jumped
FCA's adjusted EBIT in the first quarter increased 156 million euros from a year ago. Two factors drove much of the gain:
- Strong sales of the new Levante SUV drove a big jump in profit for FCA's Maserati luxury brand.
- Profit from Europe nearly doubled from a year ago thanks to new Alfa Romeo models and strong Fiat sales.
More broadly, SUVs were a big part of the story. Strong retail demand for FCA's Jeep, Alfa Romeo, and Maserati SUVs helped improve profitability in most of FCA's business units.
First-quarter highlights from FCA's business units
- Adjusted EBIT in North America rose about 1% to 1.24 billion euros despite a 6% drop in the number of vehicles sold. The sales drop came as FCA discontinued the lower-margin Dodge Dart and Chrysler 200 sedans and reduced its rental-fleet sales, which led to a modest improvement in margins.
- FCA's adjusted-EBIT margin in North America rose to 7.25% from 7.16% a year ago -- a small gain, but still short of fourth-quarter results for old Detroit rivals Ford Motor Company (NYSE:F) (9.7%) and General Motors (NYSE:GM) (8.4%). Ford and GM will both report first-quarter results later this week.
- Latin America swung to an adjusted-EBIT loss of 20 million euros from an 11 million euro profit a year ago. Sales were flat and revenue rose on favorable mix and pricing shifts -- but local inflation increased costs, wiping out profit.
- FCA is in the process of transitioning to localized Jeep production in China, reducing its imports (which are heavily taxed). That led to a drop in revenue from FCA's Asia Pacific region (which excludes results from FCA's Chinese joint ventures) but a jump in the region's adjusted EBIT (which includes equity income from the joint ventures) to 21 million euros from 12 million euros a year ago.
- As noted above, Europe was a good story for FCA. Sales and revenue both rose 12%, while adjusted EBIT rose 85% to 178 million euros from 96 million euros a year ago. The new upscale Alfa Romeo Giulia and Stelvio models boosted sales volumes and profitability.
- FCA reports results for the Maserati luxury brand separately from its regional business units. Maserati sales jumped 89%, revenue rose 87%, and adjusted EBIT rose to 107 million euros from just 16 million euros a year ago. Sales were up in all regions thanks to the success of the new Levante -- Maserati's first-ever SUV.
- FCA's Components unit includes industry suppliers Magneti Marelli, Comau, and Teksid. The unit's adjusted EBIT rose 37% to 118 million euros on a 9% year-over-year increase in revenue, on higher sales volumes and reduced costs.
FCA's debt, liquidity, and one-time charges
FCA reports "net industrial debt" as a headline number, but that number is not its total debt. FCA's calculation of "net industrial debt" subtracts its cash on hand and debt attributable to its financial-services arm from the total debt number.
FCA's net industrial debt rose to 5.1 billion euros as of March 31, from 4.6 billion euros at year-end, on what FCA said was a seasonal increase in the need for working capital.
FCA's overall debt was 21.2 billion euros at quarter-end, down from 24 billion euros as of December 31. Against that, it had available liquidity (cash and credit lines) of 21.6 billion euros, down 2.2 billion euros from year-end.
FCA's special items in the first quarter totaled about 30 million euros in charges, mostly attributable to restructuring in Latin America.
FCA reaffirmed its full-year guidance
FCA reaffirmed its previous guidance for the full year. For 2017, it still expects:
- Revenue of between 115 and 120 billion euros.
- Adjusted EBIT of more than 7 billion euros.
- Net profit (excluding special items) of more than 3 billion euros.
- Net industrial debt of less than 2.5 billion euros as of year-end.