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Fiat Chrysler reports weak earnings, scatters outlook




FCAU -14.34%


FCAU -14.34%

DETROIT-

Fiat Chrysler automobiles


FCAU -14.27%

NV reported a 35% decline in Q2 on Wednesday, cutting guidance for a number of full-year goals, a difficult start to the new Chief Executive's term , [19659006] Worse-than-expected earnings slid down the company's stock price hours after Fiat Chrysler said former CEO Sergio Marchionne had died of surgery complications.

CEO Mike Manley, who replaced Marchionne on Saturday, the results show the challenges the company faces. However, they are committed to achieving the goals set by Fiat Chrysler last month in a new five-year business plan. This strategy was outlined by Mr. Marchionne, who had planned to step down as CEO next year.

"My intention is to deliver the plan as a strong, independent FCA," Mr. Manley said during a conference call with analysts, who pointed out that the Italian-American company did not want to merge or sell with another automaker ,

Fiat Chrysler gave its quarterly earnings from its Asian business weak sales in China. Fiat Chrysler announced net income of EUR 754 million ($ 881 million) for the quarter ended June 30, following EUR 1.16 billion a year earlier

Adjusted operating profit, which compensates for one-time charges, decreased 11% € 1.66 billion after € 1.87 billion in the previous year. This was below a consensus forecast of analysts of 2.1 billion euros.

Fiat Chrysler shares fell 12% on New York morning trading.

The Company was impacted primarily by weak performance in the Asia / Pacific region, where it posted an adjusted loss of € 98 million due to weak demand for locally produced Sport Utility Vehicles in China and price increases due to import tariffs.

"It's obvious that China is clearly a priority for me in the coming weeks," said Mr. Manley, adding that he has high expectations for a newly launched luxury SUV called the Jeep Grand Commander.

Fiat Chrysler's manufacturing problem with a new pickup truck launched in the US earlier this year "is far behind us," said Mr. Manley, adding that full production would be achieved by the end of the year , The redesigned Ram 1500 is a key product for the company due to its high profit margins.

Problems in the production of the new truck burdened the company in the first two quarters each with about 300 million euros Spending will be "substantially reduced" in this quarter and abolished by the end of the year, said

Richard Palmer,

CFO of the company.

Mr. Palmer also said he expects prices for commodities like steel to continue to rise next year, but noted that the company had firm price fixes this year and had incorporated these higher price expectations into its 2019 plan. Adjusted net profit target for the whole Year, however, lowered its outlook for revenue and adjusted operating profit. For the year 2018, the company now expects sales between 115 and 118 billion euros, after previously had amounted to about 125 billion euros.

The automaker has lowered its forecast for adjusted operating income to at least € 8.7 billion, compared to previous forecasts, at between € 7.5 billion and € 8 billion

Mr. Manley expressed his confidence in his management team and said he would quickly appoint a successor

Alfredo Altavilla,

Who oversaw operations in Europe, Africa and the Middle East. Mr Altavilla, who was considered a rival for the top job, said Monday he would leave the company next month. "His departure is unfortunate, but not unforeseen," said Mr. Manley.

Fiat Chrysler said it achieved a key objective of pushing net industrial cash at the end of June to 456 million euros, compared to net debt of 1.31 billion euros at the end of March. Sales increased by 6% to 29 billion euros.

Write to Chester Dawson at [email protected] and Max Bernhard at [email protected]


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