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FCA profits driven by Americas (updated)

by David Zatz on

FCA announced a surprise increase in earnings for the final quarter of 2016, with profits (before interest and taxes) going up by 1%, to $1.7 billion.

The surprise comes not from the company’s guidance, but from increased profits after a quarter of reduced U.S. sales and increased incentives. The reason: a more expensive and profitable sales mix, which yielded an margin increase from 6.4% to 7.4% for the full year.

Around $5.5 billion of FCA’s $6.5 billion in 2016 profits (before interest and taxes — or EBIT) came from North America (before some adjustments).

Latin America turned from an €87 million loss to a €5 million profit, while Asia-Pacific profits doubled to €105 million and European profits more than doubled to €540 million. Maserati profits more than tripled, to €339 million, as its loosely Chrysler-derived new cars found willing buyers. Worldwide, FCA sold 4.7 million vehicles, with Jeep rising by 9% to 1.42 million. US market share was stable at 12.6%, with share in Brazil at 18.4% and in Europe at 6.5%.

FCA claimed it will slash its net debt to $2.7 billion, nearly half of the current net debt, as it tries for an end-of-2019 cash-positive goal. That’s based on a slated increase in sales; drops in US and Canadian demand may be countered by the effect of the new Jeep Compass and Alfa Romeo lineup.

UAW workers will be getting an average of $5,000 each in profit-sharing.

The company’s plan to end its net debt is coming at the same time as a roughly $2.5 billion investment in numerous United States assembly plants, which are projected to add 1,700 jobs.

The EBITs noted earlier do not include recall costs, which are quite high, including the Takata airbags, Cummins engines, or the first part of the factory shuffle.  MJAB noted that the Asia-Pacifica gain may be due to the transfer of marketing expenses from FCA to the joint venture company.

All the details and numbers are in FCA’s statement. Also see our 2016 retrospective, including “the top 16 of ’16.”

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