Fiat Chrysler posts surprise profit ahead of PSA merger

Thursday, 29 October 2020

Fiat Chrysler on Wednesday reported record third-quarter earnings as production returned to nearly pre-pandemic levels.

The Italian-American automaker, which is finalising its full merger with French rival PSA Peugeot, reported a net profit in the three months ending Sept. 30 of 1.2 billion euros (NZ$2.1 billion). That compares with a loss of 179 million euros a year earlier.

The carmaker reported adjusted earnings before tax and interest in North America of 2.5 billion euros. That offset deepening losses in Europe, Asia and at its Maserati luxury marquee. Latin America, the only other region to post a profit, saw it narrow by two-thirds to 46 million euros.

Overall, the carmaker said global earnings before tax and interest were a record 2.3 billion euros despite a 6 per cent fall in revenues to 26 billion euros.

“It was a remarkable quarter for our group, despite the lingering effects of COVID-19,'' CEO Mike Manley told a conference call. ”We continue to navigate through this crisis by taking decisive action.'

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Global shipments were down 3 per cent, due largely to plant retooling in North American to produce the new Jeep Grand Wagoneer in the luxury SUV segment and the discontinuation of the Dodge Grand Caravan classic minivan.

Fiat Chrysler announced earlier Wednesday that its merger with PSA Peugeot is on track to be finalised by the end of the first quarter of 2021, as planned. To meet regulatory concerns, the French carmaker is selling a small stake in a components maker to ensure the new company does not maintain a controlling share.

The new automaker, to be called Stellantis, will be the fourth biggest producer in the world, with the capacity to produce 8.7 million cars a year.

The merger, agreed last year, is aimed at creating a carmaker with the scale to confront the challenges of stricter emissions regulations and the transition to new driving technologies. PSA’s CEO Carlos Tavares will lead the group, with Fiat Chrysler chairman John Elkann head of the board.

PSA on Wednesday said that revenue in its auto division grew by 1.2 per cent in the quarter to 12 billion euros, as a strong product mix offset lower volumes.