Fiat Chrysler Automobiles CEO Sergio Marchionne has vowed to eliminate every single cent of industrial debt the automaker currently holds before the end of the year. While we await next month’s presentation of the company’s 2018-2022 business plan, during which Marchionne is expected to provide an update regarding his progress getting FCA back to black, there’s some indication that the executive’s debt-elimination program is ahead of schedule.
According to Reuters, Fiat Chrysler reduced its debts by much more than expected during the first quarter of 2018, wiping out all but €1.3 billion (about $1.54 billion US). That’s far less than the €2.6 billion ($3.07 billion) that had been forecast by a Thomson Reuters poll of analysts.
Marchionne is hoping that FCA is able to end the year with around $5 billion in net cash – a forecast that Reuters says doesn’t include one-off measures, nor the company’s planned spin-off of its Magneti Marelli parts business. That maneuver could happen by early-2019. Instead, FCA will try to meet its goals simply by ensuring that its profits exceed its expenditures. Capital spending fell by about $1 billion through the first quarter thanks to “program timing,” Fiat Chrysler says, while first-quarter operating profit rose 5 percent to roughly $1.9 billion.
That’s a bit lower than the $2 billion forecast by analysts, but Marchionne says the next investment cycle will take some time to materialize, so it may be awhile before FCA encounters any big expenditures that could derail its debt-elimination plans.
With Sergio Marchionne’s 2019 retirement looming on the horizon, his goal of eliminating Fiat Chrysler Automobiles’ debt is now closer than ever – a milestone that, if reached, would mean FCA might no longer need to find a merger partner, Marchionne says. The CEO had long been a proponent of consolidating with another global automaker to cut costs.