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Fiat Chrysler’s Maserati Profits Continued to Strengthen in 4Q17

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Fiat Chrysler’s luxury vehicles

In 2015, Fiat Chrysler (FCAU) decided to spin off its Italian luxury car brand Ferrari (RACE) as a separate company.

After Ferrari’s separation from Fiat Chrysler, Maserati was one of the key luxury vehicle brands left in FCAU’s product portfolio. Let’s take a look at the Maserati brand’s 4Q17 performance and its impact on Fiat Chrysler’s overall profitability.

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Maserati’s 4Q17 revenue fell

In 4Q17, Fiat Chrysler shipped ~16,000 units of Maserati brand cars, 15% lower than the ~18,000 units it shipped in 4Q16. With this, the company’s revenue from the luxury car brand fell ~20% YoY (year-over-year) to 12.1 billion euros, or ~$15 billion. This revenue fall was primarily the result of lower Maserati shipments and currency headwinds.

Fiat Chrysler’s reporting currency is the euro, and a large part of Maserati’s revenue comes from the United States in US dollars. For this reason, the US dollar’s weakening against the euro is acting as a headwind to the company’s profits.

In 2017, Japanese automakers such as Toyota Motor (TM) and Honda Motor Company (HMC) benefited from favorable foreign currency movements as the Japanese yen remained weak against the US dollar. In contrast, an appreciating US dollar typically negatively affects mainstream US auto giants (XLY) such as General Motors (GM), and Ford Motor Company (F).

Strength in Maserati’s profitability

In 4Q17, the Maserati segment’s adjusted EBIT (earnings before interest and tax) stood at 188 million euros, or $234 million. With this, Maserati’s adjusted EBIT margin rose significantly to 15.5% for the quarter compared to 12.1% a year ago. Reduced industrial costs and a positive product mix played an important role in boosting Maserati’s profit margins in the fourth quarter.

Continued strength in Fiat Chrysler’s luxury brands, including Maserati, helped the company to expand its overall 4Q17 margin.

Continue to the next article, where we’ll find out how FCAU’s current debt position looks following its 4Q17 results.

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