STLA Stellantis NV

By Eric Sylvers 

MILAN -- Fiat Chrysler Automobiles NV reported a second-quarter loss, putting pressure on the Italian-American auto giant to improve its performance or risk a renegotiation of the terms of its merger with Peugeot maker PSA Group.

Like with most car makers, Fiat Chrysler's profit and revenue plunged in the quarter as lockdowns in its main markets halted production and kept consumers at home. But the company posted a small profit in North America, in part due to cost cuts in areas such as advertising and as workers were furloughed.

PSA, in contrast, posted a profit in the first half -- the French company reports earnings twice a year -- showing how Chief Executive Carlos Tavares's cost cuts and reorganization in recent years are bearing fruit. He has said the question of whether the merger terms will be adjusted can only be addressed when it is clear how well the two companies have emerged from the coronavirus crisis.

The pandemic has battered the earnings of companies across almost all industries and many executives have said that it remains too early to say how quickly a recovery will come. The U.S. and European economies notched record contractions in the second quarter. Some analysts have said that Italy and some other European economies could take several years to regain the ground lost in the past few months.

The two companies have said the deal is on track to be concluded by the end of March, even with the European Union carrying out an extensive antitrust investigation. Fiat Chrysler on Friday reiterated the merger timetable. The new company will be called Stellantis and will retain the two companies' existing brands.

In the second quarter, Fiat Chrysler's net loss was EUR1.04 billion, compared with a profit of EUR793 million in the same quarter last year. Revenue fell 56% to EUR11.7 billion from EUR26.7 billion.

Adjusted operating profit in North America was EUR39 million, down from EUR1.57 billion a year earlier. The result beat Fiat Chrysler's Detroit rivals, with Ford Motor Co. losing almost $1 billion in North America in the April-to-June period and General Motors Co. posting a small loss.

Fiat Chrysler said all plants in North America, Latin America and the Asia-Pacific region are operating at pre-pandemic levels. The company has been ramping up production more slowly in Europe over the past few months and is slated to reach pre-pandemic levels by the end of September.

The company said it hasn't faced any recent problems with its supply chain, something that hampered production earlier in the year when the coronavirus had engulfed China but hadn't yet spread widely to North America or Europe.

Write to Eric Sylvers at eric.sylvers@wsj.com

(END) Dow Jones Newswires

July 31, 2020 08:59 ET (12:59 GMT)

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