Fiat Chrysler Automobiles (FCAU) reported on Feb. 6 that its fourth-quarter adjusted net income rose 3% from a year ago, to 1.53 billion euros ($1.68 billion), as strong pickup sales continued to drive improvements in profitability.
On an adjusted basis (excluding one-time items), FCA earned 0.97 euros ($1.07) per share, ahead of Wall Street's $1.02-per-share estimate as reported by Thomson Reuters. FCA's fourth-quarter revenue of 29.64 billion euros ($32.6 billion) was roughly in line with analyst estimates.
FCA's full-year adjusted net profit was 4.3 billion euros, down 9% from a year ago.
FCA's Ram 1500 pickup, new for 2019, has sold very well. Image source: Fiat Chrysler Automobiles.
The raw numbers
| Metric | Q4 2019 | Change vs. Q4 2018 | 2019 | Change vs. 2018 |
|---|---|---|---|---|
| Revenue | 29.643 billion euros | 1% | 108.187 billion euros | (2%) |
| Vehicles shipped (thousands) | 1,165 | (1%) | 4,418 | (9%) |
| Adjusted EBIT | 2.115 billion euros | 16% | 6,668 billion euros | (1%) |
| Adjusted EBIT margin | 7.1% | 0.9 pp | 6.2% | 0.1 pp |
| Net income | 1.578 billion euros | 35% | 2.7 billion euros | (19%) |
| Industrial free cash flow | 1.451 billion euros | (28.8%) | 2.113 billion euros | (52.5%) |
Data source: Fiat Chrysler Automobiles. "EBIT" is earnings before interest and tax. "Adjusted" figures exclude one-time items. FCA took 41 million euros in one-time charges related to restructuring in the fourth quarter of 2019. Vehicles shipped include totals from FCA's joint ventures with Chinese automakers. "Industrial" figures exclude results from FCA's financial-services subsidiary. Pp = percentage points.
What happened with Fiat Chrysler Automobiles in the fourth quarter?
All profit and loss figures in this section are reported on an adjusted-EBIT basis.
- North America: FCA North America's profit rose 22.7% from the fourth quarter of 2018 to 2.06 billion euros, despite a 9% decline in shipments to dealers. The story is simple: The automaker's newest models, including its well-regarded Ram 1500 and Jeep Gladiator pickups, are selling well at strong prices. FCA North America's adjusted-EBIT margin rose to a stout 10% from 8.7% in the year-ago period.
- Asia-Pacific: The Asia-Pacific unit lost 5 million euros in the fourth quarter, a nice improvement over its 112-million-euro loss in the year-ago period. Shipments fell by 29%, mostly due to ongoing China weakness, but revenue rose 4% as costs and incentives fell and product mix improved.
- Europe, Middle East, and Africa: FCA's EMEA region earned 46 million euros, down from 61 million euros a year ago, on an 8% drop in shipments primarily due to discontinued Fiat-brand products. Revenue fell 10%, as competitive pressures led to higher incentives that exacerbated the decline.
- Latin America: FCA's Latin America unit earned 134 million euros, up from 101 million euros in the year-ago period, on pricing improvements despite flat shipments and currency pressures. A sales increase in Brazil, the region's largest market, was offset by lower volumes in other key markets including Argentina.
- Maserati: The luxury brand posted a loss of 199 million euros, compared to a 151-million-euro profit in the fourth quarter of 2018, due to a 45% drop in shipments. Maserati has a new leadership team that has been working aggressively to reduce dealer inventories; that effort is now complete. The brand will present its future-product plans to investors at an event in May.
Debt and liquidity
As of Dec. 31, FCA had 15.5 billion euros in cash available to its automotive business, along with an additional 7.6 billion euros in available credit lines, for total liquidity of 23.1 billion euros. Against that, it had 12.8 billion euros in debt outstanding, with 4.8 billion euros of that due to mature in 2020.
Looking ahead: Guidance for 2020
FCA's current expectations for 2020:
- Adjusted EBIT greater than 7.0 billion euros.
- Adjusted earnings per share greater than 2.80 euros.
- Industrial free cash flow greater than 2.0 billion euros.
FCA noted that it is "monitoring" the coronavirus situation and volatility around certain commodity prices and may update its guidance as the year unfolds.
