Shares suspended after falling almost 11 per cent and full-year targets lowered
Fiat stocks hammered as poor results and CEO's death add to woes
Fiat Chrysler Automobiles' (FCA) shares plummeted more than 10 per cent on the Milan stock exchange Wednesday and its shares were suspended, after the Italian car giant published disappointing quarterly results, agencies including Bloomberg, Reuters and AFP said.
At around 11.25 GMT, the company's share price had plunged over 10.5 per cent on the Borsa, after revealing a 35 per cent loss of net profit from April to June this year. It later pared the share fall to 8.3 per cent.
The stock was suspended in Milan, marking a rocky beginning to the tenure of new chief executive Mike Manley. Earlier on Wednesday, the firm's holding company announced the death of Fiat's legendary boss Sergio Marchionne after 14 years at the helm.
FCA cut its financial targets after disappointing sales in China took a toll on second-quarter results.
Despite a record quarter in North America, FCA reported second-quarter profits dropped to €754 million (Dh3.23 billion) from €1.15bn a year earlier. It cited problems in China, including import duties that hurt sales of its luxury Maserati nameplate, increased competition from domestic brands and lower shipments from the Chinese joint venture.
North America continued its role as profit-driver, generating 85 per cent of the company's €1.65bn earnings before interest and taxes. The performance was driven by higher volumes of the new Jeep Wrangler, Cherokee and Compass as well as Dodge Journey, as the company continued to reap the benefits of the shift to 4x4s and away from passenger cars.
The Asia region swung to a loss of €98m while Maserati profits were nearly wiped out, dropping to €2m from €153m a year earlier. European earnings sank 6 per cent, to €188m, largely due to lower net pricing.
Latin America turned in 6 per cent of the car maker's profits, with a nearly 70 per cent increase in earnings, to €101m.
Overall, Fiat Chrysler reported a 6 per cent increase in shipments to 1.3 million, boosting revenue by 4 per cent to €29bn.
However, the company lowered its full-year targets. Revenue will be €115bn to €118bn this year, the car maker said on Wednesday. Previously it had guided for €125bn. Adjusted earnings before interest and taxes will fall between €7.5bn and €8bn, it said, down from about a previous forecast of €8.7bn.
The poor results took analysts by surprise.
On Tuesday Italian business daily Il Sole 24 Ore had predicted "record results: a quarter never seen in the history of the group in terms of financial strength, wealth and profitability".
However, there was some good news on a particularly difficult day for FCA: the cash flow was positive for the first time at €500 million at the end of June.
The figure is a huge feat for a company whose debt amounted to €7.7bn at the end of 2014. Tackling the debt had been one of Mr Marchionne's key objectives.