Fiat Chrysler raises outlook as Q2 profits jump 25 percent

It now sees ending the year with an adjusted net profit of 2 billion euros on 112 billion euros in sales. But the company remains heavily dependent on North America where it generates about two-thirds of sales and four-fifths of profit.

Adjusted earnings before interest and taxes rose to 1.63 billion euros ($1.79 billion) from 1.4 billion euros a year ago, the Italian-American carmaker said in a statement on Wednesday. He said that transition should help improve North American margins toward double-digits.

Operating profit for the second quarter rose 16% to €1.63 billion, not including €414 million in recall charges related to Takata airbag inflator recalls and €105 million in costs related to renovating some manufacturing to produce more pickup trucks and sport utility vehicles (SUVs).

The company noted that the increase in profit for the quarter was driven by the strong operating performance in NAFTA, EMEA and Components segments, as well as improvement in the LATAM segment. The company has a market cap of $8.87 billion and the numbers of outstanding shares have been calculated to be 1.29 billion shares. If FCA can do that, it would be a big boost for its bottom line; consider that 500,000 sales in China would be in the ballpark of about half of its US sales.

FCA is retooling several plants in the United States to boost production of more profitable SUVs and trucks, improve its model line-up and strengthen its finances before the USA market comes off its peak. The Chrysler 200 has had poor sales and Fiat Chrysler is looking to outsource future production of the auto.

North America is the carmaker’s main earnings driver and Marchionne said he expected to fully transition the United States manufacturing footprint out of passenger cars and toward higher-earning trucks and Jeeps by early next year.

Sales fell 2 percent to 27.89 billion euros and came below expectations of 29.3 billion euros.

Fiat Chrysler Automobiles NV (NYSE:FCAU) soared 1.82% or +0.12 points during previous trade after opening at the price of $6.92, a total of 6.55M shares exchanged hands compared with its average trading volume of 6.47M shares.

In Europe EBIT increased to 143 million euros from 57 million a year earlier as passenger vehicle shipments jumped 13 percent to 292,000 and light van sales rose 16 percent to 175,000.

Worldwide Jeep sales rose 16% with increases in all regions. The plant now makes the Chrysler 200 midsize auto, but that production will end in December.

A chart issued by the company shows that it overstated sales for 30 months since January of 2011, while understating the numbers for 36 months.