While the newly merged Fiat Chrysler Automobiles unveiled yesterday its ambitious global growth five-year business plan, it also reported lower than expected first quarter profit.
The plan to lift sales and expand globally is now shrouded in doubt, as trading profit, or earnings before interest, taxes and one-time items, decreased 1.4% to 622 million euros ($866 million), missing by quite a lot an average analysts estimates of 854 million euros.
Even the thriving North American unit posted a loss for the quarter, though that was caused by the fact it actually provided the cash to buy out the rest of the Chrysler Group LLC at the start of the year. Also, Fiat had a net loss of 335 million euros, bigger than the same period deficit of 83 million euros in 2013.
“If you start your 2014-2018 plan with an extremely weak quarter, nobody will give you the credit that you will achieve your targets,” said Jens Schattner, a Frankfurt-based automotive analyst at Macquarie Group Ltd. “If it was so easy just to launch new products to be successful in this industry, why wouldn’t everybody do exactly the same.”
“We bring all the various pieces of the mosaic together,” Marchionne said yesterday during his presentation in Auburn Hills, Michigan. “It’s a courageous plan that in several respects represents a major break with the tradition of the past.”
Marchionne, who announced his intention to stay throughout the five-year business plan, unveiled a 55 billion strategy that aims to at least double the current profit and also increase annual global sales by 61% to reach 7 million cars in 2018.