Fiat Chrysler Automobiles, boosted by robust gains in North America, on Thursday posted a 61 percent surge in fourth-quarter net income to $1.47 billion along with revenue growth of 6 percent to $34.7 billion.
For the full year, FCA's net income rose 3 percent to $4.1 billion. Revenue for the year ramped up 4 percent to $131 billion.
FCA said its 44,000 UAW-represented workers in the U.S. will receive average profit-sharing payments of $6,000 -- a $500 increase from the year before -- on March 8.
The 2018 profit-sharing payment is based on the company's adjusted earnings performance in North America. FCA said its UAW hourly employees have received more than $29,000 in profit sharing, on average, since 2009.
The company said it invested more than $10 billion and created nearly 30,000 jobs in the U.S. in the last decade.
Quarterly results
FCA's quarterly gain was driven by its North American business, with adjusted earnings improving nearly 25 percent to $1.9 billion. FCA's net pricing and margins rose because of the regional unit's focus on trucks and SUVs. Adjusted margins increased to 8.7 percent from 8.0 percent a year ago. North American revenue surged 15 percent to $22.0 billion.
Vehicle sales in the region rose 10 percent to 613,000 units, FCA said, while U.S. retail market share rose to 11.6 percent from 11.1 percent.
The quarter topped a full-year of breakthrough gains for FCA in North America, finishing the year with adjusted earnings rising 19 percent to $7.1 billion. Total revenue in the region improved 9.5 percent to $82.2 billion.
During a tumultuous year punctuated by the death of longtime CEO Sergio Marchionne, FCA's finances improved in 2018 by most measurements, such as:
- A $4.9 billion improvement in industrial cash, to $2.2 billion, because of growth in net income and free cash flow.
- The company's liquidity increased by $795 million to $24 billion.
- Because of ongoing debt reduction, financial expenses fell by $340 million.
- Total tax expenses, mostly due to U.S. tax cuts, fell by $794.7 million.
Europe and Asia remained among FCA's chief concerns during the year, with European unit sales falling 3 percent to 1.3 million vehicles. Adjusted earnings in the region plunged 45 percent to $461 million. Total revenue showed a 1 percent gain to $26 billion.
In China and Asia, deliveries dropped 28 percent to 209,000 units. Adjusted earnings plunged to a loss of $336 million from a gain of $195 million. Revenue slipped 17 percent to $3.1 billion.
Manley comments
FCA CEO Mike Manley, who took over the company helm last summer, said the automaker entered 2019 with “strong product momentum” thanks to the redesigned Ram 1500 pickup that launched last year and Wrangler, along with the upcoming Ram Heavy Duty line that’s slated to launch this quarter and the 2020 Jeep Gladiator pickup that arrives in the second quarter.
Manley, speaking on a conference call, said Wrangler production will dip in the second quarter as the Toledo North Assembly Plant in Ohio goes down to prepare for the launch of the Wrangler plug-in hybrid in early 2020.
The Ram Heavy Duty, he said, will see reduced output as the company ramps up production of the new model.
Manley said the brand learned from its shaky launch of the Ram 1500 in 2018, and is applying those lessons to the Ram Heavy Duty and the Gladiator.
“We were not pleased with its launch. We were slow getting up to full production rate. There were a variety reasons for that and we’ve corrected them,” Manley said. “The lessons we learned already helped to ensure that our all-new Ram Heavy duty truck is hitting its production targets early in the launch curve, and the Jeep Gladiator is also on track to start production on schedule.”
Wrangler to Gladiator
Manley said the automaker expects to see some consumer movement from the Wrangler to the Gladiator.
“We looked and tried to do as much work as possible to see if we felt that there would be large percentages of substitution between the two vehicles. In our plans, we’re expecting somewhere in the order of 10 to 15 percent,” Manley said.
He added: “As I think about combined volume going forward, that really gives some illustration of some people moving from Wrangler to Gladiator. In terms of where volumes can go, I have no doubt that, given the reception we’ve seen on Gladiator, that the production we have this year will be quickly taken up by our dealers, and hopefully, we’ll see the take it up equally fast when it arrives.”
During the call, an analyst asked Manley if FCA will revive the Dakota midsize pickup. Manley responded by saying the Gladiator will go straight into that segment -- noting it's more of a lifestyle pickup.
As for a midsize pickup designed for work-related purposes, Manley said:
"Where we sit today, the only vehicle missing in our portfolio is a metric-ton pickup, which is a midsize pickup in the U.S. I am working hard with the team to solve that. I haven’t solved that yet. But if that gets solved, it will give us the opportunity to bring a midsize truck in the marketplace."
Meanwhile, Manley predicted a tough six months for FCA’s slumping Maserati brand.
"Maserati will be down year-over-year in the first half as we apply the same discipline to destock our global dealer network and work to improve the sales performance, which frankly is unacceptable," he said.
FCA is counting on Harald Wester to turn Maserati around. He was named the marque’s chief in October.
Shares down
Meanwhile, FCA shares were down about 12.1 percent to $15.25 in New York trading because the company issued weaker-than-expected guidance for profits and industrial free cash flow for 2019, raising doubts about the automaker's longer-term financial targets.
The world's seventh-largest carmaker said in the report that it expected 2019 adjusted earnings before interest and taxes -- excluding the Magneti Marelli parts unit it has agreed to sell -- of more than $7.6 billion, below analysts' average forecast of about $8.3 billion.
FCA also said it expects industrial free cash flow in 2019 of more than $1.7 billion, which is lower than the $5 billion reached at the end of last year, due to higher capital expenditures along with cash payments for fines and other costs related to its U.S. settlement for diesel emissions infringements.
Leslie J. Allen, Philip Nussel and Reuters contributed to this report.
