Fiat Chrysler Automobiles (NYSE:FCAU) said that its adjusted operating profit fell 29% in the first quarter, to 1.07 billion euros ($1.19 billion), on slowing sales in North America and Europe.

FCA reported revenue of 24.5 billion euros ($27.3 billion) for the first quarter, down 5% from the first quarter of 2018.

A red 2019 Ram 1500 Limited, an upscale full-size pickup truck.

Good sales of Ram pickups helped FCA offset a decline in Jeep sales in North America. Image source: Fiat Chrysler Automobiles.

The raw numbers

FCA reports its financial results in euros. As of May 3, 1 euro = about $1.12.

Metric Q1 2019 Vs. Q1 2018
Revenue 24.48 billion euros (5%)
Vehicles shipped 1,037,000 (14%)
Adjusted EBIT (earnings before interest and tax) 1.07 billion euros (29%)
Adjusted EBIT margin 4.4% (1.4 ppts)
Net income 508 million euros (47%)
Industrial free cash flow (270 million euros) (127%)

Data source: Fiat Chrysler Automobiles. FCA's expression of "adjusted EBIT" excludes one-time items from the standard calculations. Vehicles shipped include totals from FCA's joint ventures with Chinese automakers and are rounded to the nearest thousand. "Industrial" figures include results from FCA's core automotive business only; results from the company's financial-services subsidiary are excluded. "Ppts" = percentage points.

A note about the sale of Magneti Marelli

In a deal that was first announced last year, FCA sold its parts subsidiary, Magneti Marelli, to Calsonic Kansei. Although the transaction closed in the second quarter (on May 2), FCA presented its first-quarter results on a "continuing operations" basis, as if Magneti Marelli had been sold before the quarter began.

FCA received 5.8 billion euros in cash for Magneti Marelli. Some of that will be passed on to shareholders: FCA's board directors approved a one-time dividend of 1.30 euros per share. That dividend will be paid on May 30.

How FCA's business units performed in the first quarter

All of the profit numbers for FCA's regions and business units are presented as the company reports them, on an "adjusted EBIT" basis. "Adjusted EBIT" is earnings before interest and taxes, "adjusted" to eliminate the effects of one-time items.

NAFTA: FCA's North American unit earned 1.044 billion euros, down 14% from a year ago on a 14% decline in shipments. In the year-ago period, FCA was selling new-generation Jeep Wranglers alongside deeply discounted outgoing models, boosting overall Jeep volumes and making for an unfavorable comparison. Chrysler and Dodge sales volumes also fell in the quarter, though an increase in Ram truck sales partially offset those declines.

FCA's margin in the NAFTA region was 6.5% in the first quarter, down 0.9 percentage points from a year ago and below the North America adjusted-EBIT margins reported by General Motors (NYSE:GM) (6.9%) and Ford Motor Company (NYSE:F) (8.7%) for the quarter.

APAC: FCA's Asia, Pacific, Africa, and China region lost 9 million euros in the first quarter, versus a profit of 10 million euros in the year-ago period. It was arguably a good result under the circumstances: Combined shipments, which include results from FCA's joint ventures with Chinese automakers, fell 30%; FCA was able to offset some of the decline with cost cuts and a somewhat more profitable mix of products sold.

EMEA: FCA's Europe, Middle East, and Africa region lost 19 million euros in the first quarter, down from a profit of 220 million euros a year ago. The story here wasn't good: Shipments fell 12%, in part because of a planned product shuffle; pricing pressures and increased costs related to regulatory compliance also weighed on results.

LATAM: FCA's Latin America unit continued to buck the regional trend, posting a profit of 105 million euros (up 31%) while rivals including Ford suffered losses. FCA's shipments in the region fell 9% on weakness in Argentina, but pricing gains and a one-time tax benefit in Brazil helped keep revenue roughly flat.

Maserati: FCA's luxury-vehicle brand, which reports results globally, earned 11 million euros in profit in the first quarter, down from 85 million euros a year ago. FCA reduced production in the quarter to help dealers clear out inventories; that led to a 41% drop in shipments and a 38% year-over-year decline in revenue.

Special items, debt, and liquidity

FCA took a total of 246 million euros in restructuring-related one-time charges in the first quarter. Those charges were partially offset by a 164-million-euro one-time credit related to a reversal of tax liability in Brazil; the upshot was a net charge of 103 million euros against first-quarter earnings.

As of March 31, FCA had 12.2 billion euros in cash and equivalents, excluding assets held within Magneti Marelli, and an additional 7.7 billion in available credit lines, for total liquidity of 19.9 billion euros. Against that, it had 14.8 billion euros in debt, with 4.8 billion euros of that set to mature by the end of 2019.

Looking ahead: FCA is maintaining 2019 guidance

FCA reiterated the mostly upbeat full-year guidance it gave in January. For 2019, it still expects:

  • Adjusted EBIT greater than the 6.7 million euros it generated in 2018
  • An adjusted-EBIT margin better than 6.1%, its 2018 result
  • Adjusted diluted EPS (earnings per share) greater than 2.70 euros (2018 result: 3.00 euros)
  • Industrial free cash flow of greater than 1.5 billion euros (2018 result: 4.4 billion euros)