Fiat Chrysler's American resilience limits loss to $1.1 billion
Fiat Chrysler Automobiles NV’s North American operations stayed in the black last quarter thanks to resilient US auto demand, shoring up results that were otherwise decimated by the coronavirus pandemic.
The 928 million-euro ($1.1 billion) adjusted loss before interest and taxes reported in a statement Friday topped analysts’ average estimate for a deficit of 1.97 billion euros. Net revenue plunged to 11.7 billion euros, trailing consensus for 14.1 billion euros.
The company didn’t give a new outlook for the year after scrapping it in March.
The 39 million euros of adjusted Ebit that Fiat Chrysler posted in North America is another sign of the US auto industry’s strength. Companies endured a debilitating two-month shutdown of production, but retail sales have rebounded, with Detroit carmakers prioritizing shipments of their most profitable models -- trucks and SUVs.
Also check these Vehicles
Fiat Chrysler’s negative industrial free cash flow of 4.9 billion euros shows just how much Covid-19 strained its finances. Italy approved a 6.3 billion-euro credit facility for the company last month, the biggest government-backed financing that a European country has arranged for a carmaker since the start of the pandemic.
There’s a lot at stake for Fiat Chrysler as it tries to recover from the disruption of the pandemic. PSA Group Chief Executive Officer Carlos Tavares told Bloomberg Television last week the two companies will finalize their combination based on where their respective cash positions are at the end of this year.
The comments from Tavares indicated the terms of the planned merger -- including a 5.5 billion-euro special dividend for Fiat Chrysler shareholders -- aren’t set in stone and could be revisited.
PSA investors who have griped about the special payout will be holding Fiat Chrysler’s numbers up against the first-half profit the French carmaker put up last week, which showed it has weathered Covid-19 better than feared.
Fiat Chrysler shares rose as much as 1.3% on Friday in Milan trading. The stock slumped 34% this year through Thursday’s close.
Also Read : Fiat Chrysler's state-backed loan crucial for Italy's economy: Intesa CEO
The public-health crisis risked putting a damper on the highly lucrative sales of Ram pickups that Fiat Chrysler CEO Mike Manley had been counting on to keep profit growing. While deliveries did falter in the second quarter, Ram held up better than the company’s other major brands.
Italy’s top lender Intesa Sanpaolo SpA is financing the loan for Fiat Chrysler, and trade-credit insurer Sace SpA guaranteed 80% of the amount.