Like its Detroit-area rivals, Fiat Chrysler Automobiles took a massive first-quarter earnings hit due to the impact of the coronavirus pandemic, posting net loss of $1.84 billion for the period with more to come.
The loss is in contrast to a $520 million profit for the same period a year ago. Additionally, the company saw its revenue drop 16% year-over-year to $22.3 billion. Adjusted pre-tax earnings were $56.3 million — a decline of 95%.
“The pandemic has had, and continues to have, a significant impact on our operations,” the company said in a statement. Officials also warned that the second quarter isn’t likely to be any better, warning that a “significant” loss is expected for the current quarter as well.
The company prepped for the coronavirus-created downturn by bolstering its cash reserves. The company cut salaries and some contract employees temporarily.
For the first quarter, FCA’s industrial free cash flow was down $5.4 billion, or 5 billion euros. Much of this is related to expenditures for the new Jeep Wagoneer and Grand Wagoneer start up. It could have been worse, the company’s Ram Truck division performed well during the quarter with revenue up 7% from the previous year and its share of the full-size pickup market rose to 24%.
The company noted that it had available liquidity of $20.2 billion, or 18.6 billion euros, as of March 31, including a $7 billion, or 6.25 billion euro, revolving credit facility which was fully drawn down in April.
Just as Ford and General Motors did, Fiat Chrysler added to its reserves last month by securing a new $3.8 billion, or 3.5 billion euro, incremental bridge credit facility, which remains fully undrawn.
“We continue to assess all funding options,” FCA officials noted.
One of the potential moves to retain cash is to suspend the company’s planned $1.2-billion, or 1.1-billion euro, dividend. Additionally, the company is planning to restart its North American plants May 18, the same date as Ford. The company’s operations in China are already up and running and Europe is set to do the same.
UAW president Rory Gamble raised concerns about the restart plans, saying automakers must “implement and follow the guidelines” for worker safety that the union provided. The union objected to automakers’ original plans to reopen in early May.