Fiat Chrysler aims for better margins than GM on way to payouts

[ROME] Fiat Chrysler Automobiles is aiming to earn bigger North American profit margins than Ford Motor and General Motors as soon as this year, paving the way for payouts to shareholders.

Chief executive officer Sergio Marchionne's desire is to beat Ford and GM in the fourth quarter, the last of his tenure, he said during a Bloomberg Television interview in Amsterdam. Fiat Chrysler plans to top its peers "by far", he said after the Italian-American carmaker's annual meeting.

"I don't have a single doubt" that Fiat Chrysler will earn "leading-edge margins," Mr Marchionne said. "When it happens, I can't tell you."

For 2017, GM reported a 10.7 per cent margin in North America on the basis of adjusted earnings before interest and taxes, topping Fiat Chrysler's adjusted Ebit margin of 7.9 per cent. Ford posted a North American operating margin of 8 per cent.

Mr Marchionne's target is for Fiat Chrysler to end this year with about 4 billion euros (S$6.47 billion) in net industrial cash. In June, the company will outline a new five-year plan in which share buybacks and dividends become "endemic" to its structure, he said.

Dividends, Transitions

Fiat Chrysler hasn't paid a dividend since its formation in 2014, standing in contrast with its US peers. The company is proceeding carefully on choosing the right internal candidate to replace its long-standing CEO, who predicted changeover at companies including Renault and Daimler.

"I think it's time for change," Mr Marchionne said in the interview. Renault's Carlos Ghosn "will eventually have to give up, even though I think he's going to live forever," as will Daimler's Dieter Zetsche.

"We're all getting to the point where we've put in 10- to 15-years' worth as a life of a CEO, and I think it's time to pass the baton to somebody else." Fiat Chrysler shares reversed losses in New York and gained as much as one per cent as of 12.35pm in New York, giving the company a market value of more than US$36 billion.

BLOOMBERG