Earnings Reports

Google Ad

Fiat Chrysler reported better-than-expected third-quarter earnings Tuesday and promised to pay 2 billion euros ($2.3 billion) in special dividends for the sale of its parts unit. However $FCA was hurt by a lower net cash forecast and losses in both Asia and Europe. 

Fiat Chrysler CEO ManleyNew Fiat Chrysler CEO Manley Led Jeep Iconic Jeep Brand

Fiat Chrysler Auto NYSE: $FCAU Reported Earnings Before Open Tuesday

Profit of EUR 1.995 Billion Beat 1.87 Billion  Forecast

Earnings

Fiat Chrysler reported adjusted earnings before interest and tax (EBIT) for the July-September period up 13 percent to 1.995 billion euros, compared with 1.87 billion euros in a Reuters poll of analysts. Sales rose 9 percent, above expectations, helped by higher shipments of the new Jeep Wrangler and Cherokee models and the new RAM 1500 pick-up truck.

Fiat Chrysler Auto NYSE: $FCAU

Market Reaction Pre-market 15.35 USD −0.66 (-4.15%)

Highlights

CEO Manley said. “Closing this transaction puts us in a much stronger position ... our aim is to complete that five-year plan, deliver on our commitments as an independent (company),” he said on a call with analysts, when asked about any future merger plans.

The Italian-American carmaker confirmed its revenue and profit forecasts for this year, but cut its net cash estimate to between 1.5 and 2.0 billion euros from around 3 billion euros, citing production adjustments and pension contributions.

It promised the special dividend after agreeing last week to sell parts unit Magneti Marelli to Japan’s Calsonic Kansei for 6.2 billion euros.

  • North America accounted for 97 percent of profit in the quarter and operating profit margins in the region rose to 10.2 percent from 8.0 percent last year as a shift to sell more trucks and SUVs continued to pay off.
  • Both Europe and Asia reported an operating loss.
  • FCA’s operations in Europe were hit by the transition toward tougher emissions tests which became mandatory from the start of September.
  • Chinese market weakness weighed in Asia and hit sales of luxury brand Maserati. The brand’s margins fell to 2.4 percent from 13.8 percent last year.
  • Manley said he saw significant upside for Europe in future.
  • Manley expects progress at Maserati in the second half of next year, adding the product remained competitive but was plagued by issues related to how it was positioned and managed.
  • FCA expects to take a hit of around 850 million euros from higher steel and aluminum prices this year, and a similar impact in 2019.
  • Group net profit in the quarter was down 38 percent as FCA set aside 713 million euros to cover potential costs related to talks with U.S. authorities over suspected diesel emissions violations - which FCA denies.
  • The charge does not represent an agreed settlement, nor is an admission of liability, FCA added. “(This provision) sits someway below most expectations of a figure in excess of 1 billion euros,” 

 

Fiat Chrysler Auto Q2 Earnings Recap 

€0.62 EPS missed €0.86 on €28.99B matched €28.99B revenue forecast

Earnings

Fiat Chrysler reported a drop in Q2 profit to €754M from €1.15B a year ago. Q2 EPS of €0.62 missed by €0.22 on revenue of €28.99B (+3.8% Y/Y) in-line. Fiat Chrysler reported that Q2 adjusted earnings before interest and tax fell 11% to 1.7 billion euros, below a Reuters forecast for 2 billion euros. 

$FCAU said that sales in China fell, partly due to increased competition from domestic brands. 

Fiat Chrysler Automobiles NV NYSE: $FCAU

Market  Reaction > Pre-market 17.58 −1.70 (-8.82%)

Outlook

Fiat Chrysler Automobiles cuts its full-year outlook. Fiat Chrysler management also cut its 2018 net revenue outlook to 115 billion-118 billion euros, down from a previous forecast of about 125 billion euros. It has also slashed its profit forecasts, predicting adjusted EBIT of between €7.5bn and €8.0bn, down from €8.7bn.

 

Fiat Chrysler Q2 Earnings Forecast

What Analysts Will Be Watching

New CEO Manley Commentary

Analysts will be looking for guidance form new CEO Mike Manley who Fiat Chrysler Automobiles NV appointed as new chief executive Saturday in an unexpected move to replace the ailing Sergio Marchionne. Marchionne had engineered the merger of Fiat and Chrysler and led the combined company for almost a decade. Mike Manley was the head of Fiat Chrysler's Jeep brand. The company's board said Mr. Marchionne wouldn't be able to return after suffering complications from surgery earlier this month.

Mr. Manley, 54, joined DaimlerChrysler AG in 2000 and has led Jeep since Chrysler LLC exited bankruptcy in 2009 under the deal with Fiat. Jeep has been one of Fiat Chrysler's strongest performers, helping underwrite a steady recovery in profitability.

Chairman John Elkann, a scion of the founding Agnelli family that owns nearly 43% of Fiat Chrysler's voting rights, said the management change was "unthinkable until a few hours ago" but would provide stability. "The succession plans we have just announced, even if not without pain from a personal point of view, mean we can guarantee the maximum possible continuity, preserving our companies' unique cultures," Mr. Elkann said.

Ferrari NV was spun off from Fiat Chrysler in 2016 and the company said separately that Mr. Elkann would take over Mr. Marchionne's role as chairman at the luxury sports car maker. Fellow board member Louis Camilleri, chairman of Philip Morris International, would succeed Mr. Marchionne as Ferrari CEO. 

In a statement, FCA said that Mr Manley “and his management team will proceed with the implementation of the 2018-2022 business plan . . . a plan that will further assure FCA’s strong and independent future”.Minor changes are expected. “Manley will make some tweaks; he has to,” said Jefferies’ Mr Houchois. “Even if there’s nothing wrong with the plan, he is likely to want to put his stamp on it.”

A company spokesman said Manley would be on a call with financial analysts next week after Fiat Chrysler releases its earnings report for the second quarter. He recently pledged to grow Jeep's share of the global sport-utility-vehicle market from nearly 6% of 8 million vehicles currently sold annually to more than 8% of an estimated 9 million vehicles by 2022. 

      • Shares closed Friday at $19.32 with a 52-week trading range of $11.61 to $24.81 

UPDATE Former Fiat Chrysler chief executive Sergio Marchionne, one of the auto industry’s most tenacious and respected auto chiefs, has died, succumbing to complications from recent surgery. (REUTERS Wed July 25)   

GM Tariff Warning

What Analysts Will Be Watching

General Motors filed at the end of June with the U.S. Commerce Department warning that the expansive U.S. tariffs on imported vehicles being considered by the Trump administration will damage $GM, U.S. jobs and American global presence.

"Increased import tariffs could lead to a smaller GM, reduced presence at home and abroad for this iconic American company, and risk less - not more - US jobs"

GM Commented The U.S. has been aggressively pushing tariffs with steel and aluminum the first big ones and then was steadfast where he stands at the recent G7.

"The threat of steep tariffs on vehicles and auto component imports risks undermining GM's competitiveness against foreign oil producers by erecting broad brush trade barriers and increase our global costs, remove a key means of competing with manufacturers in lower wage countries, and promote a training environment in which we could be retaliated against in other markets"

 

June Auto Sales

June Vehicle Sales (except GM quarterly)

      • Ford up 1.2% vs  +.08% estimate 
      • Fiat Chyrsler up 8.0% vs 7.8% estimate,
      • Honda up 4.8% vs +3.7% estimate 
      • Toyota up 3.6% vs +3.5% estimate 
      • Nissan up 1.2% vs -7% estimate 
      • Volkswagen US up 5.7% vs +3.6% estimate
      • Subaru up 15% vs 5.7% estimate
      • Hyundai-Kia up 9% vs +4.9% estimate
      • ++General Motors $GM Q2 US auto sales +4.6% vs +4.5% estimate

++ General Motors in March - No longer Reporting Monthly Sales just quarterly

Fiat Chrysler Automobiles $FCAU

      • Edmunds forecast:+7.0% Cox Automotive forecast: +7.8% Actual results: +8.0%
      • U.S. sales , including those to fleet customers, rose 8 percent to 202,264
      • U.S. retail deliveries highest since July 2005.
      • The Jeep brand led the way again with a 18.9% sales increase to 86, 989
      • Included a 88.6% boom in sales of the surging Jeep Cherokee.
      • Included a 82.2% boom in sales of the surging Jeep Compass
      • Chrysler brands down 31.7%
      • The Pacifica minivan now made up 71.1 percent of the Chrysler brand's total sales for the first six months of the year.
      • Ram brand was up 6.3 percent,
      • Dodge increased 9 percent.
      • Fiat brand down 36.4%
      • Fiat Chrysler rumored to be considering ending the Chrysler brand and discontinuing North American sales of Fiat.

Ford Motor Co. $F

      • Edmunds forecast: +0.8% Cox Automotive forecast: -0.1% Actual results: +1.2%
      • U.S. sales, including those to fleet customers, rose 1.1 percent to 230,635
      • SUV Sales rose 8.9%
      • Pickups and Vans rose 3.2%
      • F-series pickup, the most popular model in the U.S., is on pace to top 2004's full-year record of 939,511
      • Ford sold 79,204 F-series pickups in June, up 1.7 percent.
      • Sales of the F-Series rose 4.9 percent for the first six months.
      • Lincoln luxury brand rose 2.8%
      • Passenger Cars fell 14%
      • Ford said the "generational shift" from passenger cars to SUVs continues
      • Ford recently announced it would discontinue sales of the Fusion, Fiesta, Focus and Taurus cars.

General Motors. $GM (Q2 Sales)

      • Edmunds forecast: +5.6% Cox Automotive forecast: +4.9% Actual results: +4.6%
      • U.S. sales, including those to fleet customers, rose 1.1 percent to 758,356 for Q2
      • Flagship Chevrolet brand sales rose 6.2 percent
      • Silverado pickup truck sales  rose 15.7 percent  to 155,529 vehicles. The Silverado is GM's best seller in the U.S.
      • GMC brand increased 6.6 percent
      • Cadillac brand rose 3 percent
      • Buick lineup fell 12 percent.

Toyota

      • Edmunds forecast:+3.5% Cox Automotive forecast: -1.2% Actual results: +3.6%
      • Toyota sold 209,602 vehicles for June in the U.S.
      • Toyota brand sales up 4.4%
      • Lexus luxury brand down 2.6%.
      • Toyota passenger cars fell 9.2%,
      • Toyota sales of SUVs, crossovers and pickups rose 13.7%. 
      • Standout was the Highlander SUV sales up 25.3 percent.

Honda

      • Edmunds forecast: 3.7% Cox Automotive forecast: 3.7% Actual results:+4.8%
      • Honda sold 146,563 vehicles in the U.S. in June.
      • Honda brand sales rose 5.0%
      • Acura luxury brand rose 3.5%
      • Passenger car sales fell 2.4% 
      • The Accord sedan continued its sales slump falling another 10.3%.
      • The Pilot SUV's popularity continued rising  with 35.9% 
      • CR-V was the best seller for the month up 17.5%

Nissan

      • Edmunds forecast: -8.9% Cox Automotive forecast: -9.1% Actual results: -4.1%
      • Nissan sold 131,832 vehicles for June in the U.S.
      • Nissan brand sales fell 3.8% 
      • Infiniti brand sales fell 7.1%.
      • Nissan Rogue crossover sales totaled 38,413, up 18.1%, and accounted for 29.1% of the company's sales.

Hyundai-Kia

      • Edmunds forecast: 4.9% Cox Automotive forecast: 6.6% Actual results: 9%
      • Hyundai sales up 17.5 percent to 64,052 vehicles.
      • Hyundai luxury Genesis brand sales collapsed, down 50.7% for the month.
      • Hyundai sister automaker Kia sales rose 0.8% to 56, 571 vehicles

Subaru

      • Edmunds forecast: Not provided Cox Automotive forecast: 5.7% Actual Results 15%
      • Subaru sold 59,841 vehicles in the US in June
      • Beats the once-much-smaller Kia brand and nearing level of Hyundai.

Volkswagen Group

      • Edmunds forecast (not including Porsche): 3.6% Cox Automotive forecast: 3.3% Actual results: +4%
      • The Volkswagen brand was up 5.7% and sold 28,941 vehicles in June
      • Tiguan crossover is VW's best seller 

In 2017 U.S. auto sales fell 2 percent after hitting a record high of 17.55 million in 2016. Sales are expected to fall again in 2018, partly as a result of rising interest rates and fuel prices. There is also a mass  used vehicles coming off lease.

Source: AlphaStreet, GM, USA Today

Live From The Pit

From The TradersCommunity Research Desk

Log in to comment
Discuss this article in the forums (1 replies).