Fiat Chrysler rode strong full-size pickup sales to a strong second quarter result with net profit from continuing operations at €0.8 billion, or $891.4 million on revenue of €26.7 billion, or $29.8 billion.
The company’s net income was up 14% while the revenue increased just 3% compared with the same period last year.
“We continue to deliver strong performance in North America and LATAM. Robust demand for our new products, along with steps we’ve taken to exert discipline across all of our businesses, have generated the momentum to achieve our full-year 2019 guidance,” said Mike Manley, FCA CEO, in a statement.
The automaker’s adjusted earnings before interest and taxes was even better, coming in at €1.5 billion, or $1.67 billion. The company also took the time to confirm its full-year guidance. It was the company’s business in North America that lead the way, setting a new record.
North America reported adjusted EBIT of €1.56 billion, or $1.78 billion, despite significant reductions in dealer stock. The company’s overall margin was 5.7%, but in North America it came in at 8.9%.
The record Q2 results were achieved despite shipments being down 12%, largely attributable to dealer stock reductions of approximately 80,0000 units. Overall the results were a nice change from the first quarter, which saw the automaker hammered by launch costs.
The successful launch of the all-new Ram heavy-duty pickup, along with the continued success of the all-new and Classic Ram 1500, resulted in a U.S. large pickup market share of 27.9% in Q2, up 7 ppts from last year.
The all-new Jeep Gladiator, which was launched during the quarter, exceeded expectations with production already achieving full run rate, according to officials. Although new to the market, the Jeep Gladiator earned a 7.7% share of its U.S. segment in June.
FCA’s industrial free cash flows were “strong” at €0.8 billion, down €0.7 billion from prior year due to higher capital expenditures as well as the company’s €0.4 billion, or $600 million, payment for its diesel emission issues in 2018.
The automaker noted it added new executives during the quarter, including two members for Group Executive Council who recruited from outside the company. Additionally in China, the company revamped its leadership and structure of its joint venture.
The company’s reliance on light truck sales didn’t go unnoticed by analysts, especially pickups which were up 44% on a year-over-year basis. Sales of these high-priced vehicles also contributed to an 8.3% lift in average transaction prices (ATPs) for the company, which climbed to $41,328.
Thanks to the popularity of the Ram 1500 and Jeep Gladiator, FCA’s sales were slightly better than the industry average in Q2, dropping by 0.5% to an industry average decline of 1.3%. Even though sales were slightly down, the company is getting a bigger share of the market, with share growing nearly a full percentage point in the second quarter.
“The Ram 1500 continues to serve as the poster child for FCA’s success, and the Jeep Gladiator’s entry into the market also helped take the company’s truck sales and average transaction prices to an all-time high in the second quarter,” said Jeremy Acevedo, Edmunds’ senior manager of insights.
“It’s not all good news for FCA, as inventory levels are higher than they should be. FCA is getting away with not spending as much on incentives right now thanks to strong new truck sales, but as we progress further into the year they’re really going to need to step it up in order to start moving everything else off dealer lots.”
FCA is still struggling to move some of its less popular vehicles off dealer lots, with days-to-turn jumping to an average of 108 days compared to 84 days last year.