What Happened to Fiat Chrysler in Q2?

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Fiat Chrysler Automobiles N.V. (NYSE: FCAU) reported second-quarter 2018 results before markets opened Wednesday. The automaker posted adjusted diluted earnings per share (EPS) of €0.62 on revenues of €28.99 billion. In the same period a year ago, the company reported EPS of €0.69 on revenues of €27.93 billion. Second-quarter results also compare to the consensus estimates for EPS of $1.10 (€0.94 at today’s exchange rate) and $35.43 billion (€30.36 billion) in revenues.

The company also announced this morning the death of former CEO and Chair Sergio Marchionne, who had been replaced over the weekend following a lengthy hospital stay.

FCA’s adjusted EBIT fell 11% year over year to €1.66 billion, and adjusted net profit dropped 9% to €981 million. The company attributed the decline in adjusted net profit to lower operating performance that was partially offset by reduced net financial and tax expense.

The company said that its U.S. market share rose by 60 basis points to 13% year over year, with retail share up 80 basis points to 12.8%. Shipments to NAFTA countries rose 17% to 676,000 units, a record for volume shipments.

Latin American shipments rose 14% to 150,000 units, and the company said it is the market share leader in Brazil with 18.4% share, up 80 basis points. Market share climbed 110 basis points in Argentina to 13.7%.

Shipments to Asia-Pacific fell 34% to 53,000 units, primarily as a result of lower shipments from its Chinese joint venture. Shipments to Europe were flat at 396,000 units. European market share fell 30 basis points to 6.9%.

Shipments of its high-end Maserati brand fell to 7,800 units, a drop of 41% year over year.

FCA confirmed adjusted net profit guidance of around €5 billion and lowered full-year revenue guidance from €125 billion to a new range of €115 billion to €118 billion. The company’s estimate of adjusted EBIT was also lowered from around €8.7 billion to a new range of €7.5 billion to €8.0 billion.

New CEO Mike Manley said on the company’s conference call that the company’s biggest challenge in the quarter was Chinese sales and that China will continue to be a problem for the company for the rest of the year.

Shares traded down about 14.6% to $16.46 at noon Wednesday, in a 52-week range of $11.54 to $24.95. The consensus 12-month price target on the stock was $28.05 ahead of today’s announcements.