Fiat Chrysler Reports 29% Rise in Operating Profit

October 25, 2016, 12:36 PM UTC
Chrysler Fiat Announces Jeep Brand Will Anchor Company Overhaul
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Fiat Chrysler (FCA) has nudged up its full-year profit forecast for the second time this year after reporting a sharp rise in underlying operating profits in the last quarter, helped by strong demand for its Jeep SUVs.

The world’s seventh-largest carmaker said adjusted earnings before interest and tax (EBIT) rose 29 percent in the third quarter to 1.5 billion euros ($1.63 billion), above the average forecast of 1.4 billion given in a Reuters poll of 13 analysts.

That excluded charges of 159 million euros, stemming almost entirely from planned recall campaigns.

Sales in the quarter were basically flat at 26.8 billion euros, below analysts’ expectations of 27.5 billion.

FCA’s Milan-listed shares were up 3.1 percent at 6.08 euros by 1222 GMT.

The carmaker said it now expects to report a 2016 adjusted EBIT of more than 5.8 billion euros, up from a previous forecast of more than 5.5 billion euros. It left its sales and debt projections unchanged.

FCA, which spun off Ferrari at the start of this year, said net industrial debt rose to 6.5 billion euros at the end of September from 5.5 billion euros three months earlier.

Despite being one of the most indebted companies in the industry FCA is investing billions of dollars to capture a bigger share of the lucrative SUV and pick-up truck markets in North America.

FCA’s profit margins in North America rose to 7.6 percent in the quarter from 6.7 percent last year but they were far below the 11.2 percent reported on Tuesday by its U.S. rival GM .

North America accounted for 85 percent of FCA’s quarterly profit, reflecting robust demand for Jeep SUVs and pick-up trucks, but analysts remained concerned about market demand peaking as pricing is increasingly under pressure.