MILAN (Reuters) - Fiat Chrysler reported second-quarter operating profit below expectations on Wednesday, sending its shares down by as much as 14 percent as the carmaker cut its full-year outlook in response to a weaker performance in China.
The earnings were overshadowed by the news that former Chief Executive Sergio Marchionne had died after suffering complications from surgery.
Jeep head Mike Manley, appointed just four days earlier to succeed Marchionne as CEO, opened the company’s results presentation with a minute’s silence.
“The biggest challenges we face and frankly we’re going to continue to face ... are all focused in China,” Manley said when turning to the company’s performance.
FCA said adjusted earnings before interest and tax (EBIT) for the April-June period fell 11 percent to 1.7 billion euros ($2 billion), compared with 2 billion euros in a Reuters poll of analysts.
FCA said it expected 2018 net revenues of between 115-118 billion euros, down from a previous forecast of around 125 billion euros, while adjusted EBIT is expected at between 7.5-8.0 billion euros from at least 8.7 billion.
FCA shares were down 14 percent at 14.16 euros in Milan at 1500 GMT.
Previously expected upward earnings revisions are now “unlikely to come soon”, Evercore analyst George Galliers said. “As a result, it is difficult to see the stock outperforming in the coming months.”
Shares in General Motors also fell after the company reduced its 2018 profit forecast.
Chinese demand slumped in the quarter ahead of a July cut in import duties, resulting in higher incentive spending and an increase in unsold vehicle stocks that “particularly affected Maserati”, Manley said.
The rise in the group’s inventory, from 98 days of sales to 129 for Asia Pacific, will continue to impact results as stocks are cleared ahead of new emissions regulations, Manley added.
Net revenue rose 4 percent, in line with expectations.
Despite the setbacks, FCA reiterated 2022 goals set out by Marchionne in his last investor presentation on June 1, including a doubling of operating profit and a 9 billion-euro plan to catch up with rivals in hybrid and electric cars.
“Mandate is to deliver that five-year plan,” Manley said on Wednesday, stressing that the company would remain independent yet “flexible” about any new tie-up opportunities.
France’s PSA Group, which had previously explored a potential FCA tie-up before acquiring Opel from GM, also signalled readiness for further consolidation as it posted record earnings on Tuesday.
However, FCA’s controlling Agnelli family had “said several times that PSA is not the right potential partner for them”, the Peugeot maker’s Chief Executive Carlos Tavares told French daily Les Echos in an interview.
($1 = 0.8554 euros)
Reporting by Agnieszka Flak and Laurence Frost; Editing by Louise Heavens and Keith Weir