FCAU Beats Q3 Estimates but Cuts 2018 Debt Position Outlook



Fiat Chrysler’s Q3 2018 earnings

Fiat Chrysler Automobiles (FCAU) reported its third-quarter results on October 30 before the opening bell. The company reported a solid ~9.0% YoY (year-over-year) increase in third-quarter revenues to 28.8 million euros ($32.7 million), primarily driven by higher shipments. The company’s revenues also beat analysts’ consensus estimate of 27.1 million euros.

FCAU beat Wall Street’s estimates

Fiat Chrysler’s (FCAU) third-quarter adjusted EPS reached 0.89 euros (~$1.01), up ~51.0% YoY—much higher than the consensus estimate of 0.81 euros. Now, let’s take a look at the other highlights of FCAU’s third-quarter results.

Other key highlights

In the third quarter, Fiat Chrysler’s (FCAU) combined global shipments rose 3.0% YoY to 1.16 million vehicle units. Its consolidated shipments rose 7.0% YoY.

On the profitability front, Fiat Chrysler reported a 13.0% YoY increase in its adjusted EBIT (earnings before interest and taxes) with an EBIT margin of 6.9%. Its EBIT margin was 6.7% in the third quarter of 2017.

FCAU’s solid profitability from the North America and Latin America segment helped it improve its profit margins last quarter. Its profits from the Asia-Pacific segment resulted in negative adjusted EBIT, primarily due to weakness in its China sales.

Fiat Chrysler maintained its fiscal 2018 adjusted EBIT guidance of 7.5 billion–8.0 billion euros in its third-quarter earnings report. In contrast, the company cut its fiscal 2018 debt position outlook for the second time in 2018. The company expects to have net industrial cash of 1.5 billion–2.0 billion euros, compared to its previous guidance of 3.0 billion euros and its original guidance of 4.0 billion euros.

In its third-quarter earnings report, Fiat Chrysler pointed to “production realignment to expected demand and accelerated discretionary pension contribution” as a reason for this downward revision.

How Wall Street reacted

At 9:18 AM EDT, Fiat Chrysler (FCAU) stock was down 0.3% in the pre-market trading session. Despite the company’s stronger-than-expected third-quarter results, its downward revision of its 2018 debt position outlook could dent investors’ sentiments.

On October 29, FCAU stock had lost 10.3% year-to-date. Among its industry (XLY) peers, General Motors (GM), Ford (F), and Toyota (TM) had fallen 19.2%, 24.9%, and 9.3%, respectively, year-to-date.

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