Fiat Chrysler shows big profit boost for 2017; workers get $5,500 each

Fiat Chrysler Automobiles on Thursday released its earnings for 2017, showing profits up 93% for the year and announcing that eligible employees will get profit-sharing checks averaging $5,500.

The company, which has its U.S. headquarters in Auburn Hills, reported pretax profits of $4.4 billion (3.5 billion euro). Adjusted earnings per share of $3 (2.41 euro) were an increase of more than $2 (1.64 euro) during 2016. Revenues were flat at $139 billion (111 billion euro).

The earnings results beat the $1.9 billion (1.8 billion euro as released last January) in net profits the company reported for 2016. It was also significantly better than the $100 million (93 million euro) the company, citing restructuring and recall costs, announced for 2015, according to previous Free Press reports.

FCA's bottom line is benefiting in part from sales of more profitable trucks and SUVs after phasing out cars such as the Dodge Dart and Chrysler 200 in a sales environment that has not been kind to passenger cars.

The profit-sharing payments, which the company said were a result of strong financial performance for the year, represent an increase from the $5,000 checks released for 2016.

About 40,000 United Auto Workers-represented employees are to receive their checks on Feb. 16. That money is in addition to the $2,000 bonuses FCA announced when the company said earlier this month that it would be shifting production of Ram Heavy Duty trucks from Mexico to the Warren Truck Plant in 2020.

Taking the bonus and profit-sharing into account, FCA workers will match what Ford workers are getting in their $7,500 profit sharing checks announced this week.

FCA US has implemented the new tax withholding tables, which reflect the new federal tax law, beginning with the last paychecks in January. Profit-sharing bonus checks would reflect that change in withholding, according to an FCA representative.

How much extra cash would show up in the take-home amount for individual bonus checks would depend on a variety of factors, including a person’s wages, marital status and the number of withholding allowances the person claims.

Regarding its 2017 results, the company highlighted strong performance in North America, Latin America and Europe as well as improvements in its components divisions and in its Maserati brand.

The company also noted that it "nearly doubled its fourth-quarter net income and slashed its closely watched net industrial debt almost in half to $2.98 billion (2.4 billion euro), helping Chief Executive Sergio Marchionne meet the company’s full-year forecast."

During a conference call following the earnings release, Marchionne predicted that the company would be debt-free by the second quarter.

“It's going to be a big day here when we get there,“ said Marchionne, who noted that the company has been in a unique position as the only leveraged automaker in the world. A 2015 Reuters report pegged the company's net debt at the time at $10.75 billion (8.6 billion euro).

Marchionne also offered something of a challenge to one of FCA's cross-town Detroit competitors.

"I think there’s a very strong likelihood that we will outperform Ford in terms of operating earnings in 2018," Marchionne said.

FCA confirmed guidance for 2018, predicting revenues of $156 billion (125 billion euro), adjusted earnings before interest and taxes of more than $10.9 billion (8.7 billion euro), adjusted net profit of $6.25 billion (5 billion euro) and net industrial cash of $5 billion (4 billion euro).

FCA reported improvements in its pretax profits across all regions from 2016, to $6.49 billion (5.23 billion euro) in North America from $6.37 billion (5.13 billion euro), $187 million (151 million euro) from a $6.2 million (5 million euro) in Latin America, $213 million (172 million euro) from $130 million (105 million euro) in Asia and $912 million (735 million euro) from $670 million (540 million euro).

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The improvements came despite a U.S. sales drop of 8% for the year to 2.1 million vehicles, but the company has attributed that decline primarily to reductions in sales to lower-margin rental fleets.

Edmunds noted that the company had a challenging year, dropping "nearly a full percent of market share in 2017" and with incentives up 18%, but said new products could improve its outlook for 2018.

“Considering the strength of the Jeep brand and the incessant consumer demand for SUVs, FCA does have some of the right building blocks for success," according to Jessica Caldwell, executive director of industry analysis for Edmunds. "The new Ram 1500 and Jeep Wrangler are both getting positive initial reviews, so if FCA can nail the launches of their bread-and-butter products, it will give the company a needed bright spot in 2018,”

Contact Eric D. Lawrence: elawrence@freepress.com. Follow him on Twitter: @_ericdlawrence. Staff writer Susan Tompor contributed to this report.