Italian-American automaker Fiat Chrysler recorded a large net loss in the first half of the year due to the collapse of the global auto market caused by the coronavirus epidemic, while showing signs of resistance ahead of its marriage to French PSA. In the second quarter, it suffered a net loss of 1.04 billion euros, a better than expected result. Analysts had indeed expected -2 billion, according to financial information provider Factset Estimates.
The turnover of the group, which includes the brands Fiat, Chrysler, Jeep, Maserati, Alfa Romeo, Dodge and Ram, has collapsed by 56% to 11.7 billion euros, a result this time less good than expected (14 billion). As early as May, FCA CFO Richard Palmer predicted that the second quarter would be the worst of 2020, after the net loss of 1.7 billion euros and the 16% decline in its turnover recorded on the first three months of the year.
"In general, our results are better than expected (…) Our second quarter showed how the decisive actions taken and the extraordinary contribution of the people made it possible to contain the impact of the crisis", commented the boss of FCA, Mike Manley. "While the company remains vigilant on the health and safety of employees, our factories (closed for a while due to containment measures taken across the world, Editor's note) are now operational, the network has resumed sales both in stores than online and we have the flexibility and financial strength to move our plans forward, ”he added.
The group, which did not publish new forecasts for the year after withdrawing them in mid-March, said its results "had improved significantly in June". Manley said he expects a good second half. The global auto market has been hit hard by the pandemic, which has resulted in dealer closures and containment measures. In the European Union, it collapsed 55.1% in March over one year, 76.3% in April and 52.3% in May before limiting the breakage in June (-22.3% ), according to the Association of European Automobile Manufacturers (ACEA).
Focus on merger
From April to June, FCA sold 424,000 vehicles around the world, a figure down 63% over one year. FCA was able to limit the damage to its results thanks to a stronger-than-expected recovery in the North American market, where it has a strong presence. At the end of June, the manufacturer obtained a loan with guarantee from the Italian State of 6.3 billion euros, essential according to him to preserve its activities in Italy and help the entire automotive sector to overcome the crisis. It directly employs some 55,000 people on the peninsula and works there with 5,500 subcontractors, for nearly 200,000 jobs. So far, it has only used 1.8 billion.
Fiat Chrysler, which is engaged in a merger process with the French PSA, confirmed that their objective was to complete this transaction "by the end of the first quarter of 2021". If FCA recorded a loss of some 2.7 billion over the semester, PSA has shown its solidity: it remained profitable despite a 67.5% plunge in net profit to 595 million euros.
"The Covid-19 crisis further underscored the logic of the merger between PSA and FCA. The work of the two teams to complete the merger continued at a sustained pace," said the Italian-American group. "The green lights from the authorities have already been obtained in 12 of the 22 jurisdictions concerned. The investigation launched by the European Commission should not lead to any delay in the timetable," he said.
Brussels has opened an in-depth investigation because it fears that the operation will harm competition in the market for commercial vehicles, where the two groups occupy "a strong position". PSA boss Carlos Tavares said on Tuesday that talks with Brussels were going in "a good spirit" and that the questions asked were "normal". The merger should give birth to the world's third largest manufacturer in terms of turnover. The new group will be called "Stellantis". At the Milan Stock Exchange, after these announcements, the FCA title gained 1.88% to 8.9 euros around 1:30 p.m.