MILAN/DETROIT: Fiat Chrysler Automobiles NV (FCA) said on Friday that new U.S. pickup truck models would help the automaker achieve its 2019 profit targets and offset a weak performance in the first quarter.
Sticking to its previous forecast, which calls for a full-year 2019 adjusted pre-tax profit of more than 6.7 billion euros ($7.48 billion), sent FCA’s shares up more than 2.5 percent.
Nearly all – 98 percent – of the Italo-American automaker’s first-quarter profit was powered by its Ram pickup truck. FCA’s U.S. sales were down 3.1 percent in the quarter, but Ram sales were up more than 20 percent and outsold rival General Motor Co’s Chevrolet Silverado.
“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, adding that FCA spent heavily on consumer discounts to outsell the Silverado.
“The question is whether the strong performance by Ram is going to be enough to give FCA a push moving forward,” Krebs said.
Analysts and investors have worried about FCA’s over-reliance on the U.S. market, given its loss-making operations in both Asia and Europe.
FCA expects new models such as the Jeep Gladiator pickup truck and all-new Ram heavy-duty trucks to help it meet full-year targets.
Chief Executive Mike Manley told analysts on a conference call that most of the improvement in profits would come in the second half of the year.
The automaker posted a higher profit for the quarter and Manley said he expected the region’s strong performance to continue. He said FCA’s making European region, which lost money in the quarter, would return to a profit with margins of around 3 percent by the end of 2019.
FCA’s North American margin fell to 6.5 percent from 7.4 percent a year earlier. That was below the first-quarter margins for the region posted by Detroit rivals GM and Ford Motor Co .
The company’s pre-tax profit fell 29 percent to 1.07 billion euros in the quarter. Analysts had expected a 1.31 billion-euro adjusted EBIT, according to a Reuters poll.
Global sales dropped 5 percent to 24.48 billion euros, versus estimates of 26.49 billion euros.
Pre-tax profits at Maserati fell 87 percent, but CEO Manley said the performance of the luxury brand should improve in the second half of 2019.
“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.
In late trade in Milan, FCA shares were up 2.55 percent at 13.90 euros.