SUVs reward Fiat Chrysler
MILAN— Fiat Chrysler Automobiles NV is reaping the rewards of an aggressive shift to lucrative SUVs such as the Jeep Compass, Maserati Levante and Alfa Romeo Stelvio, posting a 17-per-cent jump in third-quarter profit despite weaker sales and deliveries.
By sidelining traditional sedans and hatchbacks, chief executive officer Sergio Marchionne is tapping robust demand for the rugged and roomy models to lift the Italian-American automaker’s margins to 6.7 per cent from 5.6 per cent a year ago. The results underpin the company’s goals of increasing annual profit by at least 15 per cent to more than € 7 billion ($10.4 billion).
“Marchionne’s shift to SUVs is paying off as you see a jump in profit with lower revenue, especially in North America,” said Vincenzo Longo, a strategist at IG Market in Milan.
Fiat’s CEO is emphasizing profit over growth as he seeks to prepare the company for his departure in April 2019. The goal is to shore up the balance sheet to put the carmaker in a better position to weather the changes sweeping the auto industry. Marchionne has flagged that the effort is set to involve a spinoff of component operations, such as Magneti Marelli.
Fiat shares rose as much as 4 per cent in Milan after the figures were released. The stock has surged 67 per cent this year, valuing the company at € 21.6 billion.
Adjusted earnings before interest and taxes rose to € 1.76 billion in the third quarter, beating the 1.67 billion average of seven analyst estimates compiled by Bloomberg. Revenues declined 1.6 per cent to € 26.4 billion as deliveries slipped 1.4 per cent.