Fiat Chrysler profit tops expectations, but debt rises
By Agnieszka Flak
MILAN (Reuters) - Fiat Chrysler Automobiles (FCA) (FCHA.MI: Quote) beat first-quarter profit forecasts on Tuesday, helped by a strong performance in North America, but higher debt pushed its shares lower.
FCA, which spun off luxury unit Ferrari at the start of this year, said its net industrial debt rose to 6.6 billion euros ($7.4 billion) at the end of March from 5.1 billion euros three months earlier, boosted by seasonal and currency effects.
Chief Executive Sergio Marchionne has vowed to wipe out debt by 2018 but investors are worried about product delays and headwinds in Brazil, once a key market for the group.
The world's seventh-largest carmaker said adjusted operating profit for January-March nearly doubled to 1.38 billion euros, above analysts' average estimate of 1.17 billion in a Thomson Reuters poll. Sales rose 3 percent to 26.57 billion euros, missing expectations.
"The higher debt seems to be the main negative ... and the question remains whether the profits can be replicated in future," a Milan-based trader said.
At 1205 GMT (7:05 a.m. ET), FCA shares in Milan were down 0.1 percent at 7.225 euros, having traded as low as 6.95 euros.
North America accounted for nearly 90 percent of FCA's quarterly profit, reflecting robust demand for its Jeep sport- utility vehicles (SUVs) and pickup trucks. The company also returned to profit in Latin America.
FCA is retooling two of its plants in the United States to boost production of the more profitable SUVs and trucks, improve its model line-up and strengthen its finances before the U.S. car market comes off its peak. Continued...