Fiat Chrysler's Robust 3Q17 Earnings: Investors React

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Part 4
Fiat Chrysler's Robust 3Q17 Earnings: Investors React PART 4 OF 6

Why Fiat Chrysler’s Profit Margins Expanded in 3Q17

Fiat Chrysler’s profitability

In the previous part of this series, we looked at Fiat Chrysler’s (FCAU) 3Q17 revenues from its key markets outside North America. Its revenues from Latin America rose significantly, which also gave a boost to its total revenues. Now let’s look at the company’s 3Q17 margins and profitability.

Why Fiat Chrysler&#8217;s Profit Margins Expanded in 3Q17

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Continued margin expansion

A few quarters ago, FCAU had a bad reputation for having the lowest profit margins among legacy automakers. Compared to peers (FXD) General Motors (GM), Ford (F), and Volkswagen (VLKAY), Fiat Chrysler’s profit margins were the lowest. However, in the last couple of quarters, FCAU has managed to make its profit margins comparable to these auto giants.

Fiat Chrysler’s margins continued to expand on a year-over-year basis in 3Q17 for the sixth quarter in a row. The company’s adjusted EBIT (earnings before interest and tax) stood at 1.8 billion euros (~$2.1 billion). With that, its third-quarter EBIT margin expanded to 6.7% from just 5.6% in the same quarter last year.

Similarly, Fiat Chrysler’s adjusted net profit stood at 922.0 million euros (~$1.1 billion) with a net profit margin of 3.4% in 3Q17. That reflected a huge improvement over its net profit margin of just 2.3% in 3Q16. The company reported a net profit of 740.0 million euros (~$874.0 million) in the third quarter of the previous year.

Key positive factors

In 3Q17, Fiat Chrysler managed to report profitability from all its business segments. The company attributed its improved profitability to solid operating performance and lower financial changes. A favorable product mix also acted as a positive factor for margin expansion in the third quarter.

Next, we’ll take a look at the 3Q17 performance for the Maserati brand.


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