DETROIT -- Fiat Chrysler Automobiles said Wednesday that it earned a profit of $698.2 million during the first quarter, a 34 percent gain compared with the same period a year ago, driven primarily by profits in Europe and gains by its Maserati brand.
The earnings are a record best for the company, which was formed from the merger of Fiat and Chrysler.
And the slightly better-than-expected profit is a good sign for the automaker as it faces an increasingly difficult sales environment in the U.S. and is trying to achieve the goals set out in a five-year plan in 2014.
Shares of the automaker's stock rose $1.11, or 10.5 percent, to close Wednesday at $11.65 per share.
Fiat Chrysler's global revenue increased 4 percent to $30.2 billion during the quarter compared with $28.9 billion for the same period last year.
The automaker's profit works out to 47 cents per share, slightly ahead of analysts, who, on average, expected the company to earn 46 cents per share, according to MarketWatch.
In Europe, a market that is recovering after a recession and declining industry sales that lasted years, Fiat Chrysler's pretax net income increased 85 percent to $193 million compared with $105 million for the same period last year.
In North America, the company's pretax profit increased slightly to $1.35 billion, compared with $1.3 billion for the same period last year.
Meanwhile, pretax profit soared 569 percent for the company's Maserati brand to $116.5 million from $17.4 million. That profit was driven by global sales of the Levante, Maserati's first SUV.
Fiat Chrysler, like all automakers, continues to struggle in South America, where its lost $21.8 million, compared with profit of $12 million for the same period last year.
During the first quarter of the year, the automaker faced the costs of releasing its all-new Jeep Compass, which was still in the early stages of reaching dealers during the quarter. It also discontinued its Chrysler 200 and Dodge Dart cars last year, losing the benefit of those sales. The automaker's U.S. sales fell about 7.3 percent to just over 510,000 vehicles during the first three months of the year, according to Kelley Blue Book.
After seven years of growth, industry sales in the U.S. have reached a plateau and are starting to decline just as the automaker is hitting a slow period in new cars and trucks it is introducing.
Fiat Chrysler faced rollout costs for new Jeep Compass as it expanded production globally during the first quarter, and should benefit from that release more as the year goes on.
"The coming six months will be crucial for Fiat Chrysler," David Kudla, chief executive officer of Mainstay Capital Management, said in a research note. "They have got to take advantage of the still strong and profitable light truck segment in the U.S., particularly with Jeep. Competitors GM and Ford certainly are and doing so at [Fiat Chrysler's] expense."
The automaker also is now entering the final phase of a five-year plan that CEO Sergio Marchionne unveiled in 2014 that counts on the successful reintroduction of Alfa Romeo in the U.S. and on steep sales targets for Maserati and Jeep.
"While CEO Marchionne acknowledged at the Detroit Auto Show in January that there were only eight quarters to go as the company seeks to deliver its ambitious 2018 targets, we believe that [the first quarter] will be one of the toughest waypoints for [Fiat Chrysler] to pass," George Galliers, analyst for Evercore ISI, said in a report Tuesday.
Marchionne warned investors last month at the company's annual meeting that the first quarter was going to be "difficult," but said the company's first-quarter performance will not affect expectations for the year.
"The first quarter was difficult. We had said it would have been the weakest of the year, but this doesn't change the targets for this year nor for 2018," Marchionne told reporters in Europe last month.
On Wednesday, the company reaffirmed its guidance for the year, saying it expects to earn a profit of $3.27 billion with sales in excess of $125.5 billion.
Business on 04/27/2017