Fiat Chrysler Automobiles, the world’s seventh largest carmaker, recently reported its first quarter profit jumped 22 percent, mostly in line with analyst expectations, though some industry experts still argue the company has debt issues.
FCA NV, the company created last year when its chief executive officer Sergio Marchionne manged to successfully unite Italy’s Fiat SpA with its US-based subsidiary Chrysler Group LLC, announced on Wednesday that its net income for the first three months of the year reached 92 million euros ($103 million) – while during the first quarter of last year it had registered losses of 173 million euros. Sales also took off by 19 percent to 26.4 billion euros as the European operations finally yielded a positive result. Meanwhile in the United States the Ram and Jeep brands, selling the hottest auto commodities today – pickup trucks and sport utility vehicles – assisted group sales. But, on the other hand, Latin America continued to post worse results. But a report coming from Bernstein Research sees deeper issues within the company. “Fiat’s Q1 results really do not inspire confidence. They reflect a U.S. business with pricing and profitability issues, a historic over-dependence on Brazil and a marginal European business. They also reflect a chronically leveraged company with a very unusual balance sheet – loads of cash and loads of debt,” commented Bernstein Research analyst Max Warburton.
According to FCA officials, the US side of the business, called FCA US, didn’t have major pricing and profitability problems, delivering an earnings margin of 3.7 percent for the three months period. The analysts proved more concerned over the firm’s mounting debt load – which yield large interest costs.