Fiat Chrysler makes $ 642 million in the first quarter after Marchionne

While FCA announced its third quarter results on Tuesday, the future after Marchionne was getting clearer. Although Mike Manley, the new CEO, was responsible for publishing the second quarter results in July, the relay belonged to Marchionne during this period. Marchionne died in July after a serious setback of a health problem that he had been fighting for more than a year.

For the quarter, the company reported a pre-tax profit of $ 2.28 billion (+ $ 2 billion), up 13% from the same period last year, and net profit of $ 642 million (€ 564 million), down 38%. time. Net income was $ 32.8 billion, or 28.8 billion, up 9%. Earnings per share of $ 1.01 exceeded estimates by 93 cents per share.

The company's performance was supported by strong Jeep and Ram sales in North America, where pre-tax earnings increased 51% for the quarter compared to the same period in 2017. Volumes in China, however, weighed on the results.

Three months ago, Fiat Chrysler Automobiles' executives were dealing with a tragedy.

The man who orchestrated the alliance of Fiat and Chrysler in the seventh world car manufacturer had just died, and his successor was to address the world.

Manley, who succeeded Marchionne, confessed everyone's mind in July morning as he discussed the company's second-quarter results. He called Marchionne's death and told him that he was going to be missed.

And he was. But business, like life, continues.

Manley has generally received high marks from analysts for her leadership, including presiding over the conclusion of an agreement with the sale of FCA's Magneti Marelli components for more than $ 7 billion. The sale is expected to pay $ 2.28 billion to shareholders next year and the start of an annual dividend of 20% of profits, according to Tuesday 's report.

Jon Gabrielsen, a market economist who advises automakers and auto suppliers, was baffled by the dividend plan.

"In a year, they will panic because the slowdown in the economy and the auto markets are pushing them to spend much faster than expected, according to optimistic estimates. This is the time to waste money, not trying to maintain stocks in the very short term, "he said. "The only way that makes sense is that if their bonuses are tied to stock prices, (and / or), they try to keep the stock in place to get a better price by selling the company. But they have already tried to sell the company to everyone and have failed. So what do they do when the music stops, that there are no pretenders and that they do not have any more money? "

David Kudla, CEO of Mainstay Capital Management at the Grand Blanc, said Manley's vision would begin to materialize with the release of this earnings report.

"Manley did a great job leading the Jeep and Ram brands and directing FCA's international operations. We expect him to continue the excellent work started by Marchionne with FCA, and not expect any major changes announced earlier in his term, "said Kudla.

However, Kudla also noted that the FCA, like other automakers, was facing headwinds.

"All automakers are dealing with rates, and the FCA is no different," Kudla said, noting that aluminum and steel prices are expected to drive up costs, in part. especially next year. "It could start to hurt margins unless those higher costs can be passed on to consumers."

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In recent months, FCA has sharply increased sales of SUVs and trucks, surpassing the sale of Ford in September. The company's updated product line this year, including the new Jeep Wrangler and Ram 1500, arrived at a convenient time.

"The company did things right," said Jeremy Acevedo, head of industry analysis at Edmunds, in a note. "While incentive spending has increased, it is being used wisely to reduce inventory backlog, and the company continues to build on its strong truck and SUV offerings."