Following one-time charges due to a US recall, Fiat Chrysler Automobiles NV announced a surprise third quarter net loss as the safety campaign expenses overcame the gains stemming from the company’s Jeep sport utility brand.
According to the London-based automaker, FCA came up with a loss of 306 million euros ($339 million) compared to a net income of 174 million euros during the same period last year. Many analysts had expected an increase in the overall profit, and adjusted earnings before interest and taxes surged to 1.3 billion euros from 968 million euros during the same period last year thanks to an increase in revenue of 17 percent to 27.5 billion euros. Chief executive Sergio Marchionne, the architect of the merger between Italy’s Fiat and America’s Chrysler, is now also allowing the group’s most prized possession – iconic supercar maker Ferrari – become independent in a drive to secure more cash for the ambitious $48-billion expansion strategy.
While the manufacturer strives to make the Jeep, Alfa Romeo and Maserati marquees its global assets, the company had to provision 761 million euros in the quarter for “estimated future recall campaign costs” in North America, after US auto safety regulators recently forced the automaker to also buy back some of the unrepaired vehicles. FCA restated its forecast for adjusted Ebit of more than 4.5 billion euros this year and said it expected to lower its net debt, thanks to transactions stemming from the Ferrari IPO. In the US Marchionne also targeted the Ram truck brand for future growth, adding the marquee was mulling the introduction of a large, truck-based sport utility vehicle.