Friday, May 25, 2018
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Tax benefits drive up Chrysler 4Q net earnings


U.S. sales of vehicles, such as this Chrysler 200 sedan, bolstered Chrysler's earnings last year.


DETROIT — Chrysler and Fiat will be known as Fiat Chrysler Automobiles NV as they move forward together as a single company.

Fiat’s board of directors agreed on the new name today, with headquarters for tax purposes in the United Kingdom. But the board sidestepped the thorny political issue of whether the true headquarters would be in the United States or Italy.

The announcement came on the same day both Fiat and Chrysler announced fourth-quarter and full-year earnings. Chrysler once again propped up its parent company, which would have lost money without the U.S. automaker’s strong profits.

Shares of the combined company will trade jointly on the New York Stock Exchange and in Milan, Italy. For each share of Fiat, shareholders will get one share in the new company, which will trade with a symbol of FCA.

The new company will maintain significant research, engineering and financial operations in Fiat’s hometown of Turin, Italy, and on Chrysler’s sprawling office complex in Auburn Hills, Mich. This is an attempt to avoid political controversies in Italy, where Fiat is the largest private employer, and in the United States, where the government saved Chrysler by funding its 2009 bankruptcy.

The corporate line on the headquarters location is that it’s on an airplane. Currently many of its 22-member leadership team have multiple offices in Auburn Hills, Turin, and other parts of the world. Like Sergio Marchionne, CEO of both companies, they spend hours on corporate jets flying to meetings and to visit factories and other operations.

Little is expected to change in the way the company works. Already Chrysler and Fiat have joined to design three vehicles, the Dodge Dart compact, the Toledo-built Jeep Cherokee SUV, and the upcoming Chrysler 200 midsize car. All three models share engines, transmissions, and other technologies developed in both places.

Chrysler, in its final earnings release as a separate company, said its net income more than quadrupled to $1.62 billion in the fourth quarter, boosted by strong U.S. sales and a $962 million one-time tax gain.

Without the tax benefit, the company still earned $659 million, a 74 percent increase over a year earlier.

Chrysler’s strong quarterly and full-year performance helped to prop up Fiat, which has struggled as auto sales sputter in Europe. Fiat earned 252 million euros ($345 million) for the quarter, excluding one-time items. Without earnings from Chrysler, Fiat would have lost 235 million euros ($321 million). That’s nearly double the loss from a year ago.

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