* First-quarter adjusted operating profit up 11 pct
* Net debt 5.1 bln euros at end March, lower than expected
* North America margins up to 7.3 pct vs 7.2 pct year ago
* Shares rise 9 pct following results
(Adds details, updates shares, rewrites throughout)
By Agnieszka Flak and Paul Lienert
MILAN/DETROIT, April 26 Fiat Chrysler
Automobiles (FCA) reported an 11 percent rise in
first-quarter operating profit on Wednesday, helped by a
surprisingly strong performance in North America where a shift
to sales of higher margin SUVs has started to pay off.
The world's seventh-largest carmaker still makes
about 80 percent of its profits in North America so improving,
or at least maintaining, its margins there is a key focus for
Chief Executive Sergio Marchionne.
The company said its adjusted operating margin in the region
rose to 7.3 percent in the quarter from 7.2 percent a year
earlier, with net revenue unchanged at 17.1 billion euros
($18.6 billion) despite a 6 percent year-on-year drop in
FCA has been retooling some U.S. factories to boost output
of sport-utility vehicles and trucks and discontinue production
of some unprofitable sedans in a bid to strengthen its finances
at a time the U.S. car market is coming off its peak.
FCA shares jumped more than 9 percent, on track for their
biggest one-day gain since October 2014, with traders citing
positive signals all round. Europe's auto index was up
"(North America) and net debt were the main area of focus
and came out better than expected, which should reassure
investors regarding the ability of FCA to maintain a 7 percent
plus level of operating margin in North America despite a
tougher environment," Barclays said in a note.
Shipments in North America dropped during the period as FCA
phased out its low-margin small cars Dodge Dart and Chrysler 200
in favour of its new higher-margin Jeep Compass.
EUROPE IMPROVES TOO
Overall, FCA's adjusted earnings before interest and tax
(EBIT) for the January-March period rose to 1.54 billion euros
($1.7 billion), above a 1.4 billion euros consensus in a Thomson
Net debt stood at 5.1 billion euros at the end of March,
half a billion more than three months earlier, which the company
attributed to seasonal factors. It did, however, use some of its
available cash to pay off gross debt.
Profitability improved in Europe in the first quarter too,
helped by strong sales of Alfa Romeo's Giulia and Stelvio
models, while margins at luxury brand Maserati nearly quadrupled
on the back of strong demand for its first SUV, Levante.
Marchionne has made delivering on FCA's 2018 turnaround plan
- centred around the revamp of its Jeep, Maserati and Alfa Romeo
brands - his main ambition before stepping down in early 2019.
Part of the plan is making sure FCA generates net cashflow
by then, which would also make the group a more attractive
merger candidate in the future.
Marchionne has repeatedly called for mergers to share the
prohibitive costs of making cleaner and more technologically
advanced cars, but he also stressed this month that FCA would
focus on delivering its business plan first.
FCA confirmed its target to nearly halve net debt this year
and increase adjusted operating profit by at least 15 percent,
but doubts remain about its exposure to the U.S. market, weaker
pricing there, recall costs and potential fines over emissions.
($1 = 0.9196 euros)
(Editing by Jane Merriman and David Clarke)