FCA Q1 earnings rise 5% as Europe offsets N.A. fall

MILAN -- Fiat Chrysler Automobiles said its first-quarter operating profit rose 5 percent to 1.61 billion euros ($1.96 billion) with positive results in Europe and North America offsetting lower earnings in North America.

Earnings before interest and tax (EBIT) in the NAFTA markets fell 2 percent to 1.22 billion euros even as vehicle shipments increased 6 percent to 646,000. FCA said the EBIT decrease was due the costs of launching new products and negative foreign exchange effects.

CEO Sergio Marchionne said the company has been struggling so far this year with a "challenging" launch of the redesigned 2019 Ram 1500 pickup.

Marchionne said the pickup, which is being manufactured at a retooled Sterling Heights Assembly plant north of Detroit, is "probably running today at 60 percent of cycle. That's not where we need to be. We allowed enough time in 2017 to get that installation up, but it's proven to be challenging."

Marchionne said the problematic launch has resulted in at least $300 million in additional costs because of a global response by FCA to try and correct the issues, which he did not identify. "The important thing to remember is that these are temporary costs," Marchionne said.

Europe boost

FCA's EBIT in its Europe, Middle East and Africa region rose 2 percent to 182 million euros despite its market share falling 30 basis points to 6.7 percent. The slight increase in EBIT was due to lower industrial costs and positive foreign exchange effects.

The automaker's Latin America operations swung to a 74 million euro profit as new models such as the Fiat Argo and Cronos helped shipments to jump 31 percent to 132,000.

Earnings in the company's Asia-Pacific region halved to 10 million euros due to Alfa Romeo brand launch costs and lower sales of its China joint venture with GAC.

FCA's Maserati unit posted a 20 percent fall in EBIT to 86 million euros as vehicle shipments plunged 21 percent on lower sales of the Levante SUV.

Marchionne said sales of the Levante are down because of "very poor execution of the launch." He said the recent launch of the Trofeo edition at the New York auto show has been better handled, and he expects "much better results in the U.S. for the rest of 2018 and for 2019."

The company's components arm of Magneti Marelli, Comau and Teksid had flat EBIT at 118 million euros.

FCA also said net debt fell to 1.3 billion euros ($1.6 billion) by the end of March. This put the group on course to become cash positive by the end of this year.

Reuters and Andrea Malan contributed to this report

EDITOR'S NOTE: A earlier version of this story misstated FCA's market share drop in Europe.