Fiat Chrysler first quarter profit rises image

Even if Fiat Chrysler’s worldwide sales stayed almost flat, the first quarter profit was boosted by strong demand for the high-margins SUVs.

Fiat Chrysler reported this week a better-than-expected increase in its first-quarter operating profit, as the adjusted earnings before interest and taxes nearly doubled to 1.38 billion euros (1.56 billion dollars) from 700 million euros a year ago. The automaker delivered 1,086,000 vehicles in the first three months of the year, just 1 percent under the 2015 quarterly result, but a 15 percent rise in demand for its Jeep models, thanks mainly to the North American regions, which helped earnings from sales increase 3 percent to 26.57 billion euros. FCA said net industrial debt rose to 6.59 billion euros at the end of March from 5.05 billion euros at the end of 2015, because of seasonality and foreign exchange effects. Chief Executive Officer Sergio Marchionne has set an ambitious goal to erase the company’s debt by the end of 2018 and to more than double the net income to around 5 billion euros.

And this is why Marchionne has been chasing for a merging partner to streamline the production costs particularly for the low-margins small sedans. He revealed in January that FCA would eventually stop making the Chrysler 200, as well as the compact Dodge Dart, as the company’s turnaround plan is to focus on the Jeep and Ram brands, for which the demand is expected to keep rising in coming years.