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Chrysler’s Cash Could Lower FCA Financing Costs by €1 Billion
Fiat Chrysler Automobiles NV should be able to lower its borrowing costs by about €1 billion ($1.1 billion) in 2018 by tapping into Chrysler’s $13 billion (€11.9 billion) cash reserves.
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Fiat Chrysler Automobiles NV should be able to lower its borrowing costs by about €1 billion ($1.1 billion) in 2018 by tapping into Chrysler’s $13 billion (€11.9 billion) cash reserves.
Analysts tell Bloomberg News the option is available now that FCA has retired bonds that restricted the transfer of funds beyond Chrysler’s own operations. One expert estimates the new access will save the company about €350 million this year. Another figures Chrysler’s cash will hike FCA’s net income by €630 million in 2018.
CEO Sergio Marchionne is expected to use some of Chrysler cash to help bankroll FCA’s €48 billion expansion plan, thereby reducing the need for outside finance. But most analysts remain skeptical that the company will be able to achieve its goal of tripling net income to €5 billion in 2018.
Yesterday FCA affirmed that target and other financial goals, including an operating margin between 6.4% and 7.2%. The company also raised its 2018 revenue forecast 3% to €136 billion, citing a richer mix of highly profitable trucks and SUVs.
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