What to expect from Fiat Chrysler earnings – USA TODAY
Fiat Chrysler Automobiles CEO Sergio Marchionne will have an opportunity Tuesday to clear up a long list of looming questions about the automaker’s North American production plans when the company reports earnings.
Back in January, Marchionne announced the broad outlines of a plan to discontinue the Chrysler 200 and Dodge Dart as the company makes a transition to building more Jeep SUVs and pickups in North America.
But the time frame for demise of the two cars remains unclear, and Marchionne has left at least a dozen other questions unanswered about issues that potentially affect thousands of employees in the U.S., Canada and Mexico. Those unanswered questions, mainly around the phasing out of some small car models, have frustrated employees, made UAW leaders anxious and left analysts perplexed.
Marchionne often uses such opportunities to drop bombshells — like in October 2014 when he announced plans to spin off Ferrari into a separate company. And last April when he unveiled a PowerPoint presentation called “Confessions of a Capital Junkie” and advocated for rapid consolidation of global automakers that touched off a wave of merger speculation.
So far, he hasn’t made any promises for Tuesday’s earnings call. And on Thursday, a spokesman declined to say whether the production plan will be addressed.
“It would be nice to see some clarity, but I don’t think we are going to hear anything right away,” said Stephanie Brinley, an analyst with IHS Automotive, who said the company may still be tweaking the plan.
Marchionne has continued to stir up speculation about an eventual merger with another automaker. Last week, he named Ford, Toyota and Volkswagen as potential merger partners. But he also said FCA must focus on completing its strategic plan and said any merger would likely happen after he retires. Among the big questions:
–The demise of the Chrysler 200. Sales of the Chrysler 200 have tanked this year. They have dropped 63% since the start of the year — obliterating the single-digit decline for all midsize sedans in the U.S.
Workers at the Sterling Heights Assembly Plant, where the 200 is made, have spent most the the year laid off, wondering about their future. In July, the automaker plans to eliminate a shift of workers there.
Ivan Garrett, who has worked at the plant for 23 years, went to a meeting with UAW and company officials two weeks ago hoping to get answers. He came up empty.
“We are getting very impatient,” Garrett said. “All they can say is our future is bright and we will get a future vehicle — they just don’t know what it is.”
–Product plans in limbo. What car or truck will replace the Chrysler 200 in the Sterling Heights, Mich., plant?
The Free Press and other media outlets reported in September that the automaker plans to move the Ram pickup from Warren Truck to Sterling Heights. But the company hasn’t confirmed that, or any other plan for the plant.
Meanwhile, in Belvidere, 4,200 workers who make the Dodge Dart were laid off for a week last week Moving the Cherokee to Belvidere after the company phases out the current Jeep Compass and Patriot, which are also built at that plant, would free up production capacity for the Wrangler in Toledo. But that plan also hasn’t been confirmed by the company.
–What to tell the United Auto Workers union. On Thursday, members of UAW National Chrysler Council gathered at the union’s Black Lake Conference Center in northern Michigan for a training session and a briefing from UAW Vice President Norwood Jewell.
They were hoping Jewell would provide more information about FCA’s product plan so they could brief workers at the plants they represent. But Jewell said he couldn’t provide any additional details because Marchionne’s plan still hasn’t been approved by the automaker’s Group Executive Council, according to a person who asked to remain unnamed because the briefing was intended to be private.
Wall Street has been patient.
The share price of FCA’s stock dropped by more than half from $13.99 on Dec. 31 to $6.89 on Jan. 8 after FCA spun Ferrari off into a standalone company. Since then, the stock has remained relatively stable. It closed at $7.61 on Jan. 27 and closed at $8.01 Friday.
Richard Hilgert, an analyst for Morningstar, said he expects FCA’s earnings will surprise Wall Street on Tuesday because of better than expected sales in Italy, FCA’s ability to cut costs quickly in Brazil as that economy falters and the start of production of the Chrysler Pacifica minivan in Windsor.
“(The Pacifica) will help the first-quarter results because they are actually getting revenue out of that plant,” Hilgert said.
Wall Street expects FCA will report earnings of about 26 cents per share, or net income of $433 million on Tuesday before restructuring costs and other charges.