MILAN – The cost of buying the final stake of Chrysler weighed on the newly merged Fiat Chrysler Automobile’s profits in the fourth quarter, but CEO Sergio Marchionne said Wednesday that the company is turning itself around.
Net profit for the fourth quarter was 420 million euro, down from 1.2 billion a year earlier. Not counting interest and taxes, earnings were in the black in all regions, which included a return to profits in Europe and Latin America.
“We have no regions which are bleeding,” Marchionne told analysts. “This is the first tangible proof that this thing can be turned.”
Marchionne called 2014 “a momentous year,” finalizing the five-year process to merge Fiat and Chrysler, which is now the world’s 7th largest automaker by volumes. It sold 4.6 million vehicles last year, up by 6 per cent.
Marchionne aims to boost sales to 7 million vehicles annually by 2018 through an ambitious plan to invest 48 billion euros ($55 billion) in a slew of new model launches.
Fiat Chrysler reported full-year net profit of 632 million euros ($718 million), at the low end of the company’s full-year guidance and down two-thirds from a restated 1.9 billion euros in 2013. The drop was mostly due to a 495 million euro payment made to complete the purchase of Chrysler. Earnings also took a hit from the devaluation of the Venezuelan currency.
Net of unusual items, net profit was 1 billion euros.
Shares in Fiat Chrysler, which has its headquarters in the Netherlands since fully merging last year, dropped 2.5 per cent to 11.29 euros in Milan trading.
The company forecast net profit would rise next year to between 1 billion euros and 1.2 billion euros on revenues of around 108 billion euros. It expects deliveries to rise by as much as 9 per cent to 5 million units.
The board of directors recommended no dividend for the third consecutive year.
Chrysler sales of Rams and Jeep drove the group’s revenue growth of 11 per cent, with a 15 per cent boost in North American revenue to 52 billion euros. Europe saw a small increase while Latin America suffered.
While Marchionne said he is encouraged by signs of recovery in Europe, he added “I am not opening any bottles of champagne.”