By Bernie Woodall and Jennifer Clark
DETROIT/MILAN, April 29 Carmaker Fiat's first quarter profit slumped more than expected as its U.S. unit Chrysler's sales suffered from the phase out of the Jeep Liberty pending a new model launch.
"We knew we would be limping in the quarter. I just didn't think I was going to limp that much," said Sergio Marchionne, chief executive of both Chrysler and its parent Fiat, on a conference call with analysts and reporters.
Marchionne in January warned that Chrysler's first-quarter earnings would be down from a year earlier because of the expense of product launches and the fact that the Jeep Liberty SUV was no longer being produced.
The Liberty's successor, the Jeep Cherokee, was not sold in the first quarter and will not be sold until the third quarter.
But Marchionne said that there were delays in the production launches of the Jeep Grand Cherokee and RAM heavy duty trucks, which he said are among the highest profit-makers for the automaker.
Fiat, which took control of the third-largest U.S. automaker when Chrysler emerged from a government-sponsored bankruptcy four years ago, stood by its financial forecasts for 2013 despite a worsening European car market and lower revenue in the U.S. for the first quarter.
Fiat said it sees full-year revenue in the 88 billion euro to 92 billion euro range, trading profit between 4 billion and 4.5 billion euros, and net industrial debt of about 7 billion euros.
Analysts had expected a weak quarter for the combined group, which reports consolidated earnings, and the results came in below consensus.
Trading profit was 618 million euros, below the 720 million euros forecast by 21 analysts published on Fiat's website. Pre-tax profit came in at 160 million euros, compared to a forecast of 300 million euros by analysts.
Net debt was 7.10 billion euros, in line with forecasts, and higher than the 6.5 billion euros at the end of 2012.
Citi Research analyst Harald Hendrikse said the quarter's results again highlight Fiat's difficult debt issue.
"With debt at current levels, the company cannot compete in this industry longer term against giants like Volkswagen AG spending 16 billion euros on capital expenditures and research and development," said a Citi Research report issued on Monday.
European losses narrowed, however, despite a 10 percent market drop.
Fiat's loss in Europe before interest and tax narrowed to 111 million euros from a loss of 170 million euros the quarter before. Fiat's mass market car sales in Europe fell by 8 percent, bolstered by the launch of the new Fiat 500L small car, the company said.
At Chrysler, first-quarter net income fell 65 percent to $166 million from $473 million a year earlier. Net revenue slipped 6 percent to $15.4 billion.
On the conference call, Marchionne introduced Richard Palmer, Chrysler's chief financial officer, by saying Palmer would give the "not so glorious details of a not so glorious quarter."
Chrysler said it will increase vehicle shipments in the second quarter by at least 13 percent from the first quarter, to 650,000 vehicles up from 574,000 in the first quarter.
Of the vehicles the company shipped in the first quarter, 73 percent went to the U.S. market, up from 69 percent a year earlier.
Marchionne said the Jeep Grand Cherokee, now that its launch delays are over, will show strong April sales, and that the biggest boost in Grand Cherokee sales will show in the third quarter.
Marchionne said in the coming quarters Chrysler will better match up production and retail sales performance.
"Close your eyes, plug your nose and move it on from here," said Marchionne.
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