Fiat Chrysler profits hit by charges for diesel probe

October 30, 2018 - 10:03 am

MILAN (AP) — Fiat Chrysler Automobiles said Tuesday its third-quarter profits dropped nearly 40 percent due to a one-off charge to cover possible payments in a U.S. diesel probe involving SUVs and light-duty pickups.

The Italian-American car company reported a net profit of 564 million euros ($641 million), compared with 910 million euros in the same period last year.

The lower profits took into account a 700-million-euro charge to deal with any future settlement over alleged illegal emissions devices in 104,000 U.S.-built Ram pickups and Jeep Grand Cherokees from 2014-2016. It also covers the costs of a software update to bring the vehicles into compliance.

The U.S. Justice Department sued Fiat Chrysler in May 2017 alleging that so-called "defeat device" software in the vehicles allowed them to emit fewer pollutants in lab tests than during normal driving. In the lawsuit, the government sought civil fines that could total over $4 billion, as well as court orders stopping the company from making or selling vehicles with undisclosed software.

The company has denied deliberate cheating, and said the charge was not an admission of liability. Settlement talks are still under way.

Fiat Chrysler has said it would vigorously defend itself against claims and said the devices are legal to protect engines from damage.

Excluding the charge, Fiat said its adjusted earnings before interest and taxes were a record 1.99 billion euros, while the profit margins in North American reached 10.2 percent, hitting double digits for the first time. The higher margins reflect the company's transition from building less profitable passenger cars to trucks and SUVs in its U.S. plants.

Overall revenues rose 9 percent, to 28.7 billion euros, on higher shipments of 1.12 million vehicles, up from just over 1 million last year.

North American profits counted for the lion's share of earnings, while Asia Pacific and Europe posted losses. The company said it saw lower sales and increased competition in China and lower sales of the Fiat brand and pricing pressure in Europe.

Luxury carmaker Maserati also slumped 87 percent to 15 million euros on lower volumes.

The earnings took into account higher contributions by components maker Magnetti Marelli, which Fiat Chrysler announced this month would be sold to Japanese car parts maker CK Holdings Co. Ltd for 6.2 billion euros. The deal is expected to close next year, with a portion of the proceeds going to an extraordinary dividend of 2 billion euros.

____

Tom Krisher contributed from Detroit.

AP Editorial Categories: