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Fiat Chrysler Automobiles NV confirmed its outlook for the year as strong earnings in North America offset losses in Europe and Asia, ahead of the Italian-American carmaker’s planned combination with France’s PSA Group.

Adjusted third-quarter earnings before interest and taxes stood at 1.96 billion euros (US$2.2 billion) for a margin of 7.2 per cent, the company said Thursday. The ebit figure is in line with the average analyst estimate of 1.97 billion euros. The company reported a non-cash impairment charge of 1.4 billion euros, resulting in a net loss from continuing operations of 179 million euros.

Key Insights

  • Fiat Chrysler reported earnings just hours after announcing a preliminary agreement to combine with PSA Group. The move comes amid a push for consolidation across the auto industry as manufacturers grapple with a global sales slowdown and an expensive shift to electric cars.
  • North American shipments declined 11 per cent, partially offset by volumes of the new Jeep Gladiator. Adjusted ebit almost doubled, while revenue was little changed.
  • Fiat’s European business reported a loss, with shipments declining due to the discontinuation of the Fiat Punto and Alfa Romeo Mito, as well as lower Fiat volumes. A potential combination with PSA could bolster the European business by expanding its foothold in the lucrative commercial vehicle business.
  • The carmaker registered a loss in the APAC region as shipments fell primarily from lower China joint-venture sales. CEO Mike Manley has worked to reduce losses in Asia after new products in China failed to gain traction with consumers and sales of the luxury Maserati brand plunged amid the first downturn in China’s market in a decade.

Market Reaction

  • Fiat Chrysler shares surged as much as 10.7 per cent in Milan after the PSA announcement earlier, and were up 8.3 per cent after the earnings release. The stock has risen 21.5 per cent since the start of the year, versus a 16 per cent gain in the STOXX Europe 600 Automobiles & Parts Index.