Fiat Chrysler (FCA) reported falling profits on Friday

Fiat Chrysler (FCA) reported falling profits on Friday, but its share price soared after its CEO indicated that the Italian-US group would have an “active and constructive role” in consolidating the automotive sector.

The world’s seventh-largest carmaker reported that its first-quarter net earnings were chopped nearly in half in the first three months of 2019 as sales slid, but maintained it would still meet its annual target of a stable operating profit, reports BSS.

The group’s share price briefly dove before surging by more than five percent to 14.26 euros ($16.10) as of 1500 GMT.

In an analyst call after the earnings were released, chief executive Mike Manley indicated that the carmaker was open to potential alliances.

Fiat Chrysler

“I honestly believe that in the next two-three years there will be very significant opportunities in this area and when I think about the development of our business around the world, from my point of view, FCA will be playing an active and constructive role,” he said.

“We made clear in the past that we want to be active and proactive to develop our business and improve the value for our shareholders,” he added.

“We are going to an environment where there will be opportunities.”

Rumors of potential mergers involving Fiat Chrysler have swirled in recent months. French carmaker PSA, which owns the Peugeot, Citroen and Opel brands, showed interest in a possible tie-up with FCA in early March. And later that month the Financial Times reported that follow French automaker Renault was eyeing a merger with Fiat Chrysler.

BAD NEWS WAS PRICED IN

The automaker reported that its first-quarter net profit came in at 508 million euros ($566 million), a drop of nearly 47 percent from the same period last year.

Including car parts maker Magneti Marelli, which Fiat Chrysler just sold to Japan’s Calsonic Kansei, net profits came in at 619 million euros, still far below the 778 million euros expected by an analyst consensus calculated by Factset Estimates.

Sales by the company which makes Fiat, Chrysler, Jeep, Maserati, Alfa Romeo, Dodge and Ram vehicles, slid 4.8 percent to 24.5 billion euros.

The number of vehicles shipped fell by 14 percent, which the company said was partially the result of an exceptional performance last year selling both new and old versions of the Jeep Wrangler.

Shipments fell in the Asia-Pacific region by 30 percent, mainly from a decline in China, and by 14 percent in North America, the group’s largest market.

Manley, who took over from legendary boss Sergio Marchionne after his death last year, gave investors a heads up last month to disappointing first-quarter results.

However, he expressed confidence Fiat Chrysler would meet its 2019 targets, which were reconfirmed Friday with a stable operating profit of 6.7 billion euros and a 10 percent decline of earnings per share.

“The figures were poor, but seeing as the company lowered its forecast three months ago, it seems a lot of the bad news was priced in,” CMC Markets analyst David Madden told reporters.

“It is worrying that the company had a poor performance in North America – – its largest market.

“The cooling of China and the economic uncertainty in Europe could not have come at a worse time for the firm.”

European car manufacturers are looking to consolidate the market as sales fall ahead of the EU imposing new strict emissions limits.

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This article has been posted by a News Hour Correspondent. For queries, please contact through [email protected]
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