Fiat Chrysler pins hopes on new models after weak first quarter

MILAN/DETROIT (Reuters) – Fiat Chrysler (FCA) expects new models such as the Jeep Gladiator and all-new RAM heavy duty truck to help it meet full-year targets and make up for weaker sales and profits in the first quarter, the automaker said on Friday.

Chief Executive Mike Manley said customers were responding “enthusiastically” to the roll out of the new models and that the Italian-American company would continue efforts to strengthen underperforming parts of its business.

“Based on these factors and our first quarter results being in line with our expectations, we are confident in our 2019 guidance,” he said.

Adjusted earnings before interest and tax (EBIT) fell 29 percent to 1.07 billion euros ($1.2 billion) in the January-March period, as sales and margins weakened in FCA’s North American profit center. Analysts had expected a 1.31 billion-euro adjusted EBIT, according to a Reuters poll.

“The whole quarter was powered by RAM (pickup trucks) while the rest of the company was lagging,” said Michelle Krebs, an analyst at Cox Automotive.

“The question is whether the strong performance by RAM is going to be enough to give FCA a push moving forward.”

Global sales dropped 5 percent to 24.48 billion euros, versus estimates of 26.49 billion euros.

Operating profit margins in North America fell to 6.5 percent, down 90 basis points on the same period a year ago.

Analysts and investors have been worried about FCA’s over-reliance on one region, which accounted for nearly all – 98 percent – of profits in the quarter, and given its loss-making operations in both Asia and Europe.

Milan-listed shares in FCA fell 2.8 percent after the results, before rebounding to trade up 1.2 percent at 1200 GMT.

“The numbers are pretty weak, but what’s good is that they confirmed their guidance, and this is giving support to FCA shares,” a Milan based analyst told Reuters.

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