FCA’s Net Profit Slides 38% on U.S. Diesel Problems

Fiat Chrysler Automobiles NV hiked unit sales and net revenue in the third quarter. But a €700 million charge to cover possible fines in the U.S. over diesel emissions caused net profit to plunge 38% to €564 million ($743 million).

The company’s net profit fell to €564 million ($640 million) from €910 million. Adjusted net profit, which excludes the special charge, skyrocketed 51% to €1.4 billion ($1.6 billion).

For the sake of year-on-year comparison, the figures include the company’s Magneti Marelli unit, which is being sold for €6.2 billion to CK Holdings Co. Ltd.

FCA’s unit wholesales in the third period rose 7% to 1.1 million cars and trucks. Revenue grew 9% to €28.8 billion ($32.7 billion), and adjusted earnings before interest and taxes climbed 13% to €2 billion ($2.3 billion).

Booming U.S. demand for the company’s Ram pickup trucks and Jeep SUVs, coupled with a richer mix, enabled FCA to out-earn Ford Motor Co. in the third quarter. The Europe-based carmaker generated an adjusted EBIT margin of 10% in North America.

FCA was able to reduce its debt by €1 billion to €15.4 billion in July-September. But its net industrial cash swung from a positive €456 million to a negative €189 million during the period. The company confirms its full-year guidance of net revenue between €115 billion and €118 billion, adjusted EBIT between €7.5 billion and €8 billion, and adjusted net profit of about €5 billion.