Fiat Chrysler (FCAU 16.16, +0.15, +0.94%) is little changed
in pre-market after reporting better than expected results for the third
The owner of brands like Fiat, Abarth, Alfa Romeo, Chrysler, Dodge, Jeep, Lancia, Maserati, Ram, Mopar, and SRT, among others, reported above-consensus third quarter earnings of EUR0.89 per share on an 8.9% yr/yr increase in revenue to EUR28.77 bln, which was also ahead of estimates.
The company's adjusted EBIT grew 13.5% yr/yr to EUR2.00 bln, which was a record. EBIT margin improved by 20 basis points to 6.9%, which was also a record. The company's fiscal position has continued improving in steady fashion, evidenced by Moody's decision to raise the company's credit outlook to Positive from Stable. The company's Ba2 rating was affirmed.
Worldwide shipments totaled 1.160 mln units, representing yr/yr growth of 3.3%. The growth was driven by increases in NAFTA and Latin America while Asia-Pacific and Europe, Middle East, and Africa lagged. Consolidated shipments increased 7.0% to 1.125 mln.
Net profit fell 38.0% to EUR564 mln while adjusted net profit jumped 51.4% to EUR1.40 bln. Adjusted net profit growth was driven by stronger operating performance and reduced net financial/tax expense.
Looking at the segment breakdown, NAFTA shipments grew 13.7% yr/yr to 673,000 while revenue grew 18.3% yr/yr to EUR19.07 bln. Adjusted EBIT jumped 50.6% yr/yr to EUR1.94 bln. U.S. market share increased 160 basis points to 12.9% while retail share increased 150 basis points to 12.7%. Shipment growth was recorded mostly due to all-new Ram 1500, Jeep Wrangler, and Jeep Cherokee models. EBIT growth took place due to higher volumes, positive mix and net pricing, which outweighed higher production and logistics costs. Adjusted EBIT margin improved to 10.2% from 8.0%.
Latin America shipments increased 7.9% yr/yr to 151,000 while net revenue declined 6.2% to EUR1.98 bln. Market share in Brazil increased 60 basis points to 18.2% while market share in Argentina grew 70 basis points to 12.7%. Shipment growth was driven by higher shipments to Brazil. Segment adjusted EBIT grew 40.7% to EUR83 mln due to higher volumes, positive pricing, and favorable mix. Adjusted EBIT margin improved to 4.2% from 2.8%.
Asia-Pacific shipments decreased 30.3% yr/yr to 46,000 while net revenue dropped 25.6% to EUR582 mln. The declines were due to weakness in the Chinese market and increased competition. The segment reported a pre-tax loss of EUR96 mln after reporting a pre-tax profit of EUR109 mln one year ago.
Europe, Middle East, and Africa shipments declined 4.2% to EUR273 mln. The decline was driven by lower Fiat volumes, which were partially offset by higher Jeep sales. European market share for passenger cars increased by 10 basis points to 6.3% while the share for light commercial vehicles declined 30 basis points to 10.6%. Net revenue declined 0.4% yr/yr to EUR4.96 bln. A favorable mix was offset by lower shipments and continued negative net pricing. Segment pre-tax loss totaled EUR25 mln, down from a profit of EUR127 mln reported one year ago.
Maserati shipments fell 19.3% yr/yr to 8,800 while revenue fell 23.1% to EUR631 mln. Lower shipments in China and Europe outweighed a slight increase in North American shipments. Adjusted EBIT declined to EUR15 mln from EUR113 mln while adjusted EBIT margin weakened to 2.4% from 13.8%. The declines were due to lower volumes, market mix, and higher R&D costs.
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