Fiat Chrysler CEO Sergio Marchionne said last week in Milan that Chrysler’s incentives were increasing.
Chrysler Group today reported preliminary financial results for Q2 and the first half of 2014, including a net income of $619 million for the quarter, up 22% from $507 million in the year-ago quarter. Chrysler net revenue for the Q2 was $20.5 billion, up 14% from a year ago. Fiat Q2 earnings, reported last week, saw its Q2 profits drop 55% with a net profit of only $266 million down from $587 million in Q2 2013.*
It’s clear that the Auburn Hills, MI based US automaker, now wholly owned by Fiat, is carrying Fiat, whose shareholders last week approved a long-sought merger of the two companies into one, London-based corporation – Fiat Chrysler Automobiles. An IPO will no doubt eventually follow.
Chrysler global vehicle shipments were 727,000 for the quarter, up 10% from 660,000 one year ago. Vehicle sales for Q2 were 723,000, up 12% from a year ago. US market share was 12.1% for the quarter, up from 11.4% a year ago; market share in Canada was 15.3% for the quarter, up from 15.1% a year ago. Vehicle sales outside North America increased 19% from the second quarter of 2013, to 89,000, including 13,000 vehicles manufactured by Chrysler Group and sold by Fiat.
Adjusted Net Income for the first half of 2014 was $1.1 billion, up from $696 million in the first half of 2013. This number excludes the unfavorable negative balance sheet hit of Q1 debits resulting from Chrysler’s prepayment of a note held by the UAW Retiree Medical Benefits Trust (VEBA Trust Note) and a charge for commitments associated with the January memorandum of understanding signed with the UAW. Including the infrequent items, net loss for the first half of the year was $71 million. However, it was necessary so that Fiat could take over complete ownership of Chrysler and consolidate the companies.
Fiat and Chrysler CEO Sergio Marchionne said last week in Milan during a disappointing Fiat Q2 earnings announcement that Chrysler’s incentives were increasing. Ram truck, the minivans and Jeep continue to be the strongest offerings. Ram with profitable upside in the recovering US pickup truck market; Jeep with global appeal and new products coming, including an Italian-built small SUV, provide the greatest opportunities.
The Chrysler Group financial targets for the full year 2014 are confirmed as follows:
1. Worldwide vehicle shipments of ~2.9 million (up from ~2.8 million)
2. Net revenue of >$80 billion
3. Modified Operating Profit of $3.7-$4.0 billion
4. Adjusted Net Income of $2.3-$2.5 billion
5. Free Cash Flow of $0.5-$1.0 billion
* Fiat S.p.A. had tepid results in Q2 and H1 of 2014. Revenue was up $61.5 billion in H1, +8% year-over-year, or +13% at constant exchange rates or CER. For Q2, revenue totaled $31.5 billion, +5% y-o-y in nominal terms or +10% CER. Net profit was $32.5 million in H1, compared to – gulp – $629 million for H1 ’13. As noted, looking at only Q2, net profit was $266 million down from $587 million in Q2 2013.
