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Fiat Chrysler reported quarterly results on Wednesday.

MIGUEL MEDINA/AFP/Getty Images

Automaker Fiat Chrysler took the market by surprise by sticking to its full-year profit guidance on Wednesday after a strong performance from its Ram pickup truck in North America helped it defy an industry slowdown.

Chief executive Mike Manley, in FCA’s first earnings release since a failed attempt to merge with France’s Renault, also left the door open to that or other deals.

“We are open to opportunity,” Manley said on a call with analysts.

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“I have no doubt why there still would be interest in it,” he added, when pressed on what it would take to revive talks with Renault. Manley declined to comment further.

FCA last month abandoned its $35 billion merger offer for Renault, blaming French politics for scuttling what would have been a landmark deal to create the world’s third-biggest automaker.

Manley said a merger was not a must-have and Fiat Chrysler’s business plan was strong. The company said it remained confident its adjusted earnings before interest and tax (EBIT) would top last year’s 6.7 billion euros ($7.5 billion).

Given disappointing forecasts from other automakers this earnings season, FCA’s confirmation of the outlook sent Milan-listed shares in the Italian-American automaker, whose other brands include Jeep, up over 4 per cent.

A broad-based auto sales downturn has rattled the sector, forcing FCA’s competitors – including Renault, Daimler and Aston Martin – to cut their sales forecasts after second-quarter results, while U.S. car maker Ford gave a weaker-than-expected 2019 profit outlook.

Japan’s Nissan Motor Co, a long term partner of Renault, said it would cut 12,500 jobs by 2023 after its earnings collapsed.

In the second quarter FCA’s adjusted EBIT totalled 1.52 billion euros, versus analysts’ expectations of 1.43 billion euros, according to a Reuters poll.

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FCA’s U.S. shipments were down 12 per cent in the second quarter but the group said that the successful performance of its Ram brand resulted in an enhanced share of the large pickup truck market of 27.9 per cent, up 7 percentage points from last year.

Adjusted EBIT margin in North America rose to 8.9 per cent from 6.5 per cent in the first quarter, thanks to strong demand for the heavy-duty Ram and the new Jeep Gladiator pickup.

Chief Financial Officer Richard Palmer also said FCA expected to report up to 10 per cent margins in the region in both the third and fourth quarters.

Evercore ISI analyst Arndt Ellinghorst in a research note called the second-quarter margin in North America “certainly the greatest relief” after the disappointing first-quarter performance.

FCA also cited the group’s strong performance in Latin America, where it gained market share, to support its confidence in the outlook for the year.

Manley called Asia Pacific difficult and price pressure will continue to be felt in the third quarter, but said he expects results to improve. Shipments in that region fell 34 per cent in the second quarter, including a decline of about 60 per cent at its China joint ventures.

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FCA also cut its industry sales forecast for both Asia Pacific and China.

Margins turned positive in Europe, the Middle East and Africa, to 0.4 per cent, after the region lost money in the previous quarter.

The company said it would continue to focus on the underperforming areas of its business in the second part of the year, including Maserati and the EMEA region. Manley called Maserati’s sales volumes “disappointing,” and said the third and fourth quarters would be difficult for the brand.

For the EMEA region “we continue to target increased margins through the impact of restructuring actions, better management of channel mix, and targeted product strategies,” FCA said.

Manley said earlier that the European region would return to profitability with margins of around 3 per cent by the end of 2019. But new models such as full-electric 500 mini car and hybrid versions of Jeep and Maserati SUVs are not expected to hit the market before next year.

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