Fiat Chrysler's lower cash forecast overshadows special dividend pledge

MILAN / DETROIT (Reuters) – Fiat Chrysler (FCA) reported better-than-expected third-quarter earnings and promised to pay 2 trillion euros ($ 2.3 trillion) in special dividends, but a lower net cash forecast and its over-reliance on the North American market weighed on its shares.

Milan-listed shares in FCA (FCHA.MI) closed down 3.2 percent on Tuesday.

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 approval of the Magneti Marelli unit to Japan's Calsonic Kansei for 6.2 billion euros.

The sale was so great after Sergio Marchionne fell in love with the doctor.

Manley said the dirty Magneti Marelli put FCA in the strongest position since its formation in 2014, and made its liquidity position comparable to peers.

The deal also reaffirmed its commitment to deliver on its independent company, Manley added.

"Closing this transaction puts us in a much stronger position …" "We are in the middle of the future." merger plans.

The special dividend comes on top of ordinary dividends of 20 percent of earnings that the company has already pledged to pay starting early next year. Both still need to be approved by the board and shareholders.

The world's seventh-largest carmaker said it was 13 percent to 1.995 billion euros, compared with 1.87 billion euros in a Reuters poll of analysts.

Sales rose 9 percent, with new Jeep Wrangler and Cherokee models and the new RAM 1500 pick-up truck.

ONE REGION STORY

North America accounted for 10.2 percent of 8.0 percent of revenue in the region and 10 percent of the total revenue of SUVs continued to pay off.

However, the over-reliance on one region worried some.

"Bernstein analyst Max Warburton said," This is now a region story, a ripe for a turnaround. "While the U.S. delivered spectacularly, the news is not encouraging."

Both Europe and Asia reported operating loss.

FCA's operations in Europe were hit by the transition to tougher emissions tests which became mandatory from the start of September.

Chinese market success weighed on FCA's performance in Asia and hit sales of Maserati luxury brand. 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.

He also expects progress at Maserati in the second half of next year, adding the product was competitive and was plagued by issues related to how it was managed.

FCA expects to take over 850 million euros from 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 the admission of liability, FCA added.

"(This provision) sits some more than a billion euros," Evercore ISI analyst George Galliers said in a note.