UPDATED: 7/25/18 8:37 am ET
Fiat Chrysler Automobiles NV cut its financial targets after disappointing sales in China took a toll on second-quarter results, marking a rocky beginning to the tenure of new CEO Mike Manley.
The Italian-American automaker lowered its guidance for revenue and profit this year, and said higher competition and slumping sport utility vehicles sales in China had hurt revenue.
The problems in China present a significant challenge for Manley, who was thrust into the spotlight on Saturday when he was named CEO to replace an ailing Sergio Marchionne, who died on Wednesday. Fiat Chrysler’s five-year plan to double profit is dependent on a rapid expansion of the brand in the world’s largest automotive market, and sales in Asia regressed.
The automaker said net income for the quarter fell 35 percent to $881.9 million. Revenue gained 4 percent to $33.91 billion. Adjusted earnings fell 9 percent to $1.15 billion.
The company said it now holds $533 million in net cash compared with net industrial debt of $1.53 billion on March 31.
FCA shares fell 8.45 percent in pre-market trading in New York.
Asia operations fell to a 98-million euro ($115 million) loss as Jeep’s expansion in China failed to gain traction. The slump extended to luxury brand Maserati, as customers waited for a duty reduction to in July to take delivery of Levante SUVs.
Overall, the company now expects revenue of $134.5 billion to $138.9 billion, according to a statement Wednesday. Previously Fiat Chrysler had guided for $146.2 billion.