Fiat Chrysler swings to a loss in Q1 as COVID-19 shuts factories and weighs on demand
- Fiat Chrysler records a roughly £1.47 billion net loss from continuing operations in Q1.
- The Italian-American automaker suspends its full-year guidance on COVID-19 uncertainty.
- CEO Michael Manley says FCA is currently reviewing a planned £960 million dividend.
In its announcement on Tuesday, Fiat Chrysler Automobiles (NYSE: FCAU) said that the ongoing Coronavirus pandemic weighed heavily on demand in Q1 and swung the company to a net quarterly loss. According to FCA:
“The pandemic has had, and continues to have, a significant impact on our operations.”
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The Italian American auto manufacturer recorded a roughly £1.47 billion net loss attributed to continuing operations in the first quarter. In the same quarter last year, the carmaker had posted around £443 million in profit.
FCA suspends full-year guidance on COVID-19 uncertainty
FCA also said on Tuesday that the rising Coronavirus uncertainty makes it difficult for the company to give meaningful guidance as it withdrew its full-year financial outlook for 2020. The company said that investors will be updated as soon as the impact of COVID-19 becomes clearer on its performance.
Despite a hit to its financial performance, FCA expressed its commitment to the merger agreement with France’s PSA Group that is expected to create the 4th largest car manufacturer in the world. According to CEO Michael Manley, FCA plans on finalizing the transaction latest by early 2021.
Manley further added that the company is currently reviewing a planned £960 million dividend.
The Coronavirus pandemic pushed the worldwide production factories and showrooms to temporarily shut down fuelling an unprecedented decline in car sales. Under such circumstances, global automakers are currently faced with a massive challenge of conserving cash.
In its report on Tuesday, FCA also said that it is slowly resuming operations at its European and Chinese facilities. The North American factories, the company added, are expected to reopen later this month on May 18th.
Fiat Chrysler’s Ram truck sales surge 7% in North America
FCA attributes the majority of its quarterly profit and revenue to North America. In this region, it saw a 7% increase in its Ram truck sales in the first quarter as compared to the comparable quarter last year. Fiat Chrysler had a greater 24% share in the market for full-size pickups in the recent quarter.
The Italian-American carmaker saw higher capital expenditures in Q1 ascribed to the redesigned models of Jeep Grand Cherokee. FCA also launched an all-new Grand Wagoneer and Jeep Wagoneer in the first quarter. For full-year, however, the company estimates its capital expenditures to be slashed by around £870 million.
The £10.37 billion company is currently around 45% down year to date in the stock market and has a price to earnings ratio of 4.48.