Chrysler Drives Fiat Profit
NEW YORK (The Deal) -- Fiat SpA on Wednesday announced a new name, a U.S. stock listing and a strong fourth-quarter result, but the company also issued tepid 2014 guidance that serves as a reminder of the challenges that still face the automaker.
Turin, Italy-based Fiat, which earlier this month acquired the 41.5% in Chrysler Group it did not own for $4.35 billion, said it would rechristen itself Fiat Chrysler Automobiles NV as part of a reorganization that includes moving the company's registration to the Netherlands and claiming a British tax base.
The company, listed on the Milan exchange, also intends to trade in New York.
"A new chapter of our story begins with the creation of Fiat Chrysler Automobiles," company chairman John Elkann said in a statement. "A journey that started over a decade ago, as Fiat sought to ensure its place in an increasingly complex marketplace, has brought together two organizations each with a great history in the automotive industry and different but complementary geographic strengths."
The different geographies played into fourth-quarter results: Fiat recorded $1.62 billion in net income, assisted by a one-time tax gain and a robust contribution from Chrysler in North America. Chrysler's strength helped offset European weakness at Fiat. Without Chrysler's contribution, Fiat would have lost 235 million ($321.2 million) during the final three months of 2013.
But 2014 still appears challenging. Fiat said it expects a 2014 trading profit of between 3.6 billion and 4 billion, below consensus forecasts of 4.15 billion. The company is also suspending its dividend as part of its effort to rebuild its cash reserves after acquiring Chrysler.
The Italian automaker has endeavored under CEO Sergio Marchionne to expand its scale and reach. Fiat began its foray into Detroit by buying 20% of Chrysler as that company emerged from a government- assisted bankruptcy in 2009, gaining majority control in 2011 under a deal with the U.S. Treasury.
While North America has been strong for automakers, Europe and Latin America remain troubled. Fiat said that fourth-quarter earnings in Latin America fell 80% year-over-year, and are expected to weigh on results in 2014. More worrying, the company, even post-deal, is still dwarfed by global rivals. The merged entity sold 4.4 million vehicles in 2013, less than half the total of titans General Motors
Marchionne is expected to detail in May how he intends to blend Fiat and Chrysler into a single entity, a move that should help streamline costs and simplify global product sales and development.