Fiat Chrysler sees Q1 loss ahead of May 18 reopening, PSA merger deal on track for completion by 2021


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Fiat Chrysler Automobiles (FCA) charted a loss of 1.69 billion euros (RM7.9 billion) for the first quarter of 2020, and has warned of a significant loss for the subsequent quarter even with its most profitable North American truck business set to resume operations on May 18, Reuters reported.

This contrasts with a profit of 508 million euros (RM2.4 billion) recorded a year earlier. “The pandemic has had, and continues to have, a significant impact on our operations,” the company said in a statement, though it continued to make an operating profit, albeit 95% lower than previously.

The continued uncertainty due to the Covid-19 pandemic led the company to withdraw its full-year guidance, but said it will be updated once it had a better view of the crisis’ overall impact. Fiat Chrysler had signed a binding 50:50 merger deal with PSA Group that was first announced last October, and the Italian-American automaker group said that work on the tie-up has been ‘progressing incredibly well’.

Between then and now, the terms of the deal between the two companies have not changed, and FCA remains “committed to completing the transaction by the end of this year or early 2021,” said FCA chief executive Michael Manley. A planned 1.1 billion euro (RM5.1 billion) dividend is now under review as part of FCA’s efforts, while the company also scrapped its full-year earnings forecast, Manley said.

The automaker has started reopening production plants in China and Europe, ahead of the aforementioned May 18 reopening of its North American facilities. Much of FCA revenue comes from North America, a market which recorded a 7% growth in quarterly sales of its Ram trucks from the previous year, while its share of the full-size pick-up truck market grew to 24%.

Capital expenditure increased in the quarter, driven by the company’s spending on the Jeep Wagoneer and Grand Wagoneer models as well as the next Grand Cherokee. However, full-year capex estimates would be lowered by 1 billion euros (RM4.7 billion) as key programme launches have been delayed by three months on average, according to Reuters.

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