FCA earnings decline despite record profit margins in North America
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Fiat Chrysler Automobiles (FCA) posted third-quarter earnings of US$ 640 million (564 million euros), 41% down from nearly US$ 1.1 billion (910 million euros) in the same period last year despite strong sales in North America, a region that provides the bulk of its profits.
The decrease derives from an estimated US$ 794-million (700-million euro) charge that the company booked to pay possible fines related to “U.S. diesel emission matters”, which is in fact an investigation that alleges the automaker failed to disclose software on more than 100,000 pickups and SUVs equipped with EcoDiesel engines that regulators said could be similar to the “defeat devices” Volkswagen used to cheat emissions tests on millions of vehicles.
“Now, this does not represent a settlement outcome or any admission on our part, but reflects a prudent level of provision given our assessment of the status of ongoing negotiations with the regulatory agents and their counterparties,” said CEO Mike Manley at the earnings conference call.
FCA posted a 10.2% adjusted pre-tax margin in North America, the highest since Fiat took over the bankrupted Chrysler and in line with a prediction made two years ago by late CEO Sergio Marchionne, who said that the Italian-American automaker would post a record double-digit profit margin in that region in the near future.
Last September, FCA sold more vehicles than Ford for the first time since January 2007, which led to a market share increase to 12.9%, up 160 basis points year-over-year, attributed to strong demand of the all-new Ram 1500 and Jeep Wrangler, as well as the Jeep Cherokee.
The automaker also said that its US$ 7 billion (6.2 billion euros) sale of components division Magneti Marelli will enable a payment of an extraordinary dividend of nearly US$ 2.2 billion (2 billion euros), the first since Fiat and Chrysler merged nearly five years ago.
FCA operates assembly plants in Saltillo, Coahuila and Toluca, State of Mexico. Saltillo is also home to one of the company’s largest engine plants worldwide.