Fiat Chrysler, Hit by Recalls, Loses $330 Million in 3rd Quarter

DETROIT (Detroit Free Press/TNS) -

Fiat Chrysler Automobiles’ stock fell 4.5 percent on Wednesday after the automaker reported a $330 million (299 million euro) third-quarter loss, blaming the cost of recalls and vehicles damaged in the Tianjin, China, port explosion in August.

Without those two charges the automaker would have earned a profit of $303 million or 20 cents per share, meeting analyst expectations.

The automaker’s first quarterly loss since the first three months of 2014 caused its stock price to fall 69 cents, or 4.5 percent, to $14.72 on Wednesday.

The automaker’s loss compares to a profit of $208 million ($188 million euros) for the same period last year.

FCA said it recorded a one-time charge of $842 million “for estimated future recall campaign costs” and recorded a charge of $157 million to account for inventory that was lost or damaged in the port explosion. In August, two massive explosions in warehouses in the port of Tianjin, in northern China, killed more than 100 people, left hundreds more injured and devastated large areas of the city.

In July, the National Highway Traffic Safety Administration hit the automaker with civil penalties of $105 million for its poor track record of completing recall campaigns and also ordered the automaker to offer to repurchase about 200,000 Ram pickups and Dodge SUVs that it failed to properly or quickly fix in recalls issued in 2013. Both the penalties and the buyback program were the largest ever levied by NHTSA.

“Given the recent increase in both the cost and frequency of recall campaigns, the group has revised its actuarial methodology for the estimate of future recall costs,” the company said in a statement.

The quarterly loss follows five consecutive profitable quarters for the automaker. FCA last reported a quarterly loss after the first three months of 2014, when the automaker purchased 41.5 percent of the company shares previously owned by the UAW Retiree Medical Benefits Trust.

Despite the higher recall-cost projections, the automaker left its guidance for the year unchanged, saying it still expects to earn an adjusted net profit of $1.3 billion for the year and sell more than 4.8 million cars and trucks worldwide.

FCA sold 1.11 million cars and trucks for the three-month period ending Sept. 30, generating revenue of $30.4 billion (27 billion euros). That compares with 1.09 million cars and trucks and $26 billion (23.5 billion euros) for the same period a year ago.

The automaker’s North American division continues to be its best-performing region in the world, largely because industry sales are on pace to surpass 17 million vehicles for the first time in a decade.

In North America, the automaker said it earned a pre-tax profit of $1.3 billion for the quarter compared with $613 million for the same period last year.

In Europe, the automaker earned a pre-tax profit of $20 million for the quarter compared with a loss of $59 million for the same period last year.

In South America, the automaker’s pre-tax profits fell to $28 million for the quarter compared with $62 million last year.

In Asia, the automaker reported a pre-tax loss of $91 million compared with a profit of $187 million for the same period last year.

The earnings report is the first since the automaker’s UAW workers ratified a new four-year contract and after it completed an initial public offering of Ferrari.