Fiat Chrysler second-quarter profits jump, outlook raised

Fiat Chrysler Automobiles today raised its revenue forecast after strong sales in North American and a recovery in the European market boosted second-quarter profits by 70 per cent. The company’s shares rose 76 cents, or 5.2 percent, to $15.28 in midday trading in the U.S.

FCA which has its main listing in New York and is due to spin off its Ferrari luxury unit in late 2015, reported adjusted earnings for the second quarter prior to taxes and interest of $1.67 billion or 1.525 billion euros.

Revenue was up 25% to over 29.2 billion euros and net industrial debt sat at 8 billion euros as of June 30.

Owners can choose to have their vehicles repaired, or they can sell their vehicles back to FCA for 10% above the original purchase price, minus depreciation.

CEO Sergio Marchionne downplayed the overall cost of the actions, saying that the pickup buyback wouldn’t cost more than $20 million.

It was a bit of good news for the Italian-American automaker, which is bracing to shell out a record $90 million for lapses in recalls of its vehicles under a deal reached with US regulators.

The company also said that it had booked a charge of $88.8 million related to the wide-ranging consent order it had agreed to earlier this week with the National Highway Traffic Safety Administration. The agency has the power to fine companies up to $35 million for an incomplete individual recall and in the case of Fiat Chrysler; there are about 23 recalls that it has failed to adequately complete, some of them dating back to 2009. The Jeep brand was up 19% in the quarter in the US, which FCA said was the brand’s best-ever performance.

He said the company notified customers on time 98 percent of the time. He has also pushed for more car-industry consolidation to share technology costs and boost returns.

FCA attributed the strong results in part to strength in the NAFTA region, including improvement of its operating margin there to 7.7. percent. Both GM and Ford margins were above 10 per cent.

Marchionne said selling components maker Mangeti Marelli is not part of the near-term strategy, but didn’t rule it out over the long term.