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FCA profits shot up — driven by US

by David Zatz on

FCA’s adjusted operating profits shot up in the third quarter, with profits in North America rising from 6.7% of sales a year ago to 7.6% of sales. North America once again drove profits for FCA as a whole, but the Europe/Africa/Middle East region returned to profitability.


Net income went from a $420 million loss in the third quarter of 2015 to a net profit of roughly $660 million in this past quarter.  Last year’s loss was largely due to a $667 million charge against recall costs, but would have been far smaller than the July-September 2016 profits regardless.

The company has $25 billion in available funds, including credit lines.

The quarter’s profits were somewhat hurt by a $162 million charge for new recalls; this includes the full impact of what appears to be a Cummins diesel issue, with FCA saying that it believed that a supplier had responsibility for a recall, but no recovery of funds had been agreed upon.

While there were profits, net industrial debt actually rose from around $6 billion to around $7.1 billion from July to September, making the road to debt-freedom in 2018 somewhat harder. Still, FCA raised its 2016 profit forecast, believing that Jeep would spur greater revenues by the end of the year (likely due to the launch of a long-awaited Compass replacement).

FCA predicted that North American profits will fall due to a higher reliance on fleet sales, offset by a better mix of vehicles being sold.

The new plan for Jeep is to gain in sales by 17%, to 1.45 million for 2016, and — still — to hit 2 million worldwide sales in 2018, despite an industry-wide softening of sales in North America.

Also today, General Motors announced that its net income had more than doubled to $2.77 billion for the past quarter, with higher transaction prices. Revenue was up to $43 billion. GM’s Buick recently scored a #3 place in the Consumer Reports quality survey; FCA took up most of the bottom slots, accompanied by Tesla.

The details: Year to date, FCA has seen a slight increase in shipments, including joint ventures, rising by 6,000 units (from YTD 2015) to around 3,487,000.  Shipments excluding joint ventures dropped by 2% to 3,327,000. Net revenue were $81 million, up by $118,000. Net profit shot up from a $112 million loss to a $1.5 billion gain.  Net industrial debt rose, as noted earlier.  See the press release for more.

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