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Inside the Analyst Estimates for Fiat Chrysler’s Revenue Growth

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Fiat Chrysler’s revenue estimates

Analysts are estimating Fiat Chrysler Automobiles’ (FCAU) 1Q16 revenues to be around 27.8 billion euros, or about $31.4 billion—5.2% higher than in 1Q15. This growth rate expectation is significantly lower than FCAU’s revenue growth rate of 19.3% in 1Q15.

Inside the Analyst Estimates for Fiat Chrysler's Revenue Growth

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Revenue growth in 2016

Analysts estimate FCAU’s 2016 revenues to be around 115.4 billion euros, or about $130.3 billion, which represents a 4.4% YoY (year-over-year) growth. However, in 2014 and 2015, the company’s revenues grew at a rate of 8.1% and 18.1%, respectively.

The company’s strong performance in North America during the past year and the weakening euro are among the key drivers of this impressive revenue growth rate. Note that in 2015, total US automobile sales were at nearly 17.4 million vehicles—the company’s highest level yet.

FCAU has a high dependency on North America, with nearly 63% of its total revenues coming from the region in 2015. Increased concerns that US auto sales may have already peaked amid global economic weakness could explain why analysts are seeing a declining revenue growth rate for the company.

The euro this year

US-based automakers (XLY) like Ford Motor Company (F) and General Motors (GM) face negative impacts from the strengthening US dollar. By contrast, as Fiat Chrysler is based in Italy, its reporting currency is the euro. In recent years, the euro has dramatically fallen against all major currencies, including the US dollar (by nearly 11% in 2015). With the highest exposure to the US among all its major geographical markets, FCAU benefitted in 2015 from the weakening European currency.

But so far in 2016, the euro has appreciated by more than 4%. This means that US dollar revenues from North America will be lower when converted into euros, and a continuation of this recent trend in the EU currency could bite into FCAU’s revenues going forward. (We should note that in the past couple of years, Japanese automakers Honda Motors [HMC] and Toyota [TM] benefitted from weakening Japanese yen.)

Continue to the next for a look at what analysts are estimating for FCAU’s 1Q16 margins.

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