MILAN/DETROIT (Reuters) - Fiat Chrysler (FCA) shares fell 12 percent on Thursday after weaker-than-expected guidance for profits and industrial free cash flow this year raised doubts about the Italian-American carmaker’s longer-term targets.

FILE PHOTO: A Fiat Chrysler Automobiles (FCA) sign is seen at its U.S. headquarters in Auburn Hills, Michigan, U.S. May 25, 2018. REUTERS/Rebecca Cook/File Photo

Chief Executive Mike Manley sought to persuade investors that the 2020 goals - set by late boss Sergio Marchionne - were still achievable, especially if the carmaker’s North American profit engine keeps spinning, new product launches lift margins and steps to fix weaknesses elsewhere pay off.

“I wouldn’t put 2020 out of the picture. It’s something that’s still very much there,” the 54-year-old Briton told analysts on a call, adding the pending launches of the new Jeep Gladiator and Ram heavy-duty pickup would help drive sales.

But the comments did little to reassure investors who worry about FCA’s over-reliance on one region, its weak performance in China and persistently low profitability in Europe.

Weaker margins in North America in the last quarter compared with the previous three months also raised concerns, especially given stiff competition in the SUV and truck markets that are vital for FCA, and the fact U.S. demand is starting to slow.

“The U.S. market remains key for near term growth,” said Evercore ISI analyst Arndt Ellinghorst, adding he would be watching how the sales of higher-margin pickups and utility vehicles develop in the second part of 2019 and next year.

Milan-listed FCA shares closed down 12.2 percent, their biggest daily drop since a profit warning on July 25, when the news of Marchionne’s death was also announced.

Thursday’s share drop also weighed on U.S. rivals General Motors and Ford.

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FCA promised in June to deliver 2020 adjusted earnings before interest and tax (EBIT) - excluding the Magneti Marelli unit it has agreed to sell - of 9.2-10.4 billion euros.

On Thursday, the world’s seventh-largest carmaker said it expected 2019 adjusted EBIT of more than 6.7 billion euros ($7.6 billion). That is below analysts’ average forecast of 7.3 billion euros and suggests little improvement on 2018, when FCA posted an adjusted EBIT on the same basis of 6.7 billion euros.

Guidance for industrial free cash flow of more than 1.5 billion euros was also down from last year’s outcome, due to higher capital spending, fines and other costs related to its U.S. settlement for diesel emissions infringements.

Last year’s results came in roughly in line with analysts’ expectations, with North America accounting for 85.5 percent of profits.

FCA has retooled some U.S. plants to boost output of lucrative SUVs and trucks, while ending production of unprofitable sedans, and helping make up for weakness in Asia, Europe and at luxury brand Maserati.

FCA’s operations in Europe, long plagued by low plant utilization rates, were hit by the transition towards tougher emissions tests which became mandatory from September.

The carmaker pledged to spend 5 billion euros on new models and engines in Italy to try make better use of factories and boost jobs and margins.

Chinese market weakness weighed on FCA’s performance in Asia and hit Maserati sales, which Manley does not expect to pick up until the later part of this year. The brand’s 2018 margins slumped to 5.7 percent from 13.8 percent a year earlier.

Manley said FCA was open to partnerships to gain scale and drive down costs, but only with companies that “have very similar values to us.”

“We can either find scale within our brands, and we have opportunity to do that, or we can find it with a partnership,” he said.

Capital spending is forecast to rise this year and next, in part to fund the 2020 redesign of the high-margin Jeep Grand Cherokee and the introduction of an all-new Jeep Grand Wagoneer, both of which should bolster profits.

FCA’s global portfolio lacks a mid-size pickup truck, a product the company had promised by 2022, and Manley said the company was still considering whether to approve production.