Global Automaker Fiat Chrysler Warns Force Closure Of European Plant Due To Coronavirus

As the coronavirus outbreak wreaks havoc on a rapidly expanding list of multinationals, Fiat Chrysler Automobiles NV (NYSE:FCAU) has warned it could close a plant in Europe. The company is concerned over the affected supply of parts from China and has said that it would have to halt production at one of its four European facilities. However, despite supply chains being affected, Toyota and Peugeot-Citroen have said that they don’t expect to close the UK plants. Wuhan in China, the epicentre of this contagious virus, is a major hub for automotive components used by carmakers around the world.

Fiat Chrysler Automobiles sells vehicles and related parts, services and production systems across the world; it has its own designing, engineering, manufacturing, and distribution facilities. It has centralised design, engineering, development and manufacturing facilities for its mass-market vehicle brands. The street and racing technology (SRT) enabled vehicles along with Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Fiat Professional, Jeep and Ram brands are designed and marketed in different markets across the world. The Group’s Maserati brand is renowned for its luxury vehicles.

The Group’s business segments include and EMEA (Europe, the Middle East and Africa), NAFTA (The North American Free Trade Agreement), APAC (Asia-Pacific) and LATAM (Latin America). The company has more than 100 manufacturing units and 40 plus R&D centres along with the presence of dealership network in more than 130 countries. In addition, the company has forged joint ventures and commercial arrangements with third-party financial institutions to facilitate car leasing & rental services along with retail and dealer financing. The company is involved in several businesses such as automotive parts and service (Mopar), production systems (Comau) and iron & castings (Teksid). FCA is listed under the symbol FCAU on the New York Stock Exchange.

Globally, 25 thousand plus people have been infected by the deadly virus, and more than 500 people have reportedly died due to this pandemic. Many sectors from tourism to technology to aviation have been impacted by the outbreak of this virus. Chinese economy, which contributes around 16.66 per cent to the world’s economy, is now expected to slow down as the supply of parts to the automotive and technology industries has been affected by the Coronavirus outbreak.

Hyundai, the South Korean carmaker, has stopped its production due to disrupted supply of automotive parts that are usually sourced from China. Japanese carmaker, Honda has three plants in Wuhan, where operations have been halted. Toyota, General Motors and Volkswagen have also halted operations at their manufacturing units in China.

Not only the automakers but other industries too are deeply impacted by the outbreak, as with travel restrictions imposed by Beijing; Airbus has stopped its production line in China (Tianjin). British drug maker, GSK which has packaging facility in China (Tianjin), has said it will remain closed. Foxconn (Wuhan), one of the key suppliers of Apple, has also halted production and the reopening is expected by mid-February.

Fiat Chrysler-Business Performance For FY19

(Source: Company’s website)

Fiat Chrysler Automobiles reported strong results for the Financial year 2019. The company’s net profit from continuing operations was recorded at €2.7 billion during the period. The company’s Adjusted net profit was recorded at €4.3 billion in the fiscal year 2019. The Group’s Adjusted EBIT was recorded at €6.7 billion along with industrial free cash flows of €2.1 billion.

During the period, Fiat Chrysler recorded solid performances from the North American region and improved Latin America results, which led to continued value generation for its shareholders. The Group’s Adjusted EBIT margin was recorded at 6.2 per cent during the period. North American results were strongly driven by the Ram and Jeep brands. Ram brand sales in the United States were up by 18 per cent as a result of the all-new Ram Heavy-Duty, Ram 1500 and Ram 1500 Classic.

The 2020 North American Truck of the Year, the all-new Jeep Gladiator was also a major contributor in delivering record results in North America. In the European, the Middle East and African region, due to sales channel actions and discontinued products, the Group’s combined and consolidated shipments were down by 8 per cent and 9 per cent, respectively. In addition, due to lower volumes, the Net revenues were down by 10 per cent.

Fiat Chrysler Automobiles -Stock price performance

Daily Chart as at Feb-06-20, after the market close (Source: Thomson Reuters)

At the time of writing (after the market close, on 6^th February 2020), shares of the Fiat Chrysler Automobiles were at USD 13.68 and increased by 0.44 per cent against the previous day closing price. The total M-cap (market capitalisation) of the company stood at $21.36 billion with an annual dividend yield of 5.33 per cent.

Daily Traded Volume Summary

The 5-day average daily traded shares, which exchanged hands were recorded at 1,050,137.00, which was approximately 27.13 per cent more than the 30-day average daily traded shares, which exchanged hands at the NYSE (New York Stock Exchange). At the time of writing, after the market close, the day’s traded volume of the shares of the company was around 1,090,985 and number of trades executed stood at 1,734 at the NYSE (New York Stock Exchange).

52-week High/Low range

In the past 52 weeks, shares of the Fiat Chrysler Automobiles have hovered between a high price level of USD 16.24 (as on 12th November 2019) and a low-price level of USD 12.12 (as on 16^th August 2019). At the current level of trading, as quoted in the price chart, shares traded around 15.76 per cent below the 52-week high and were 12.87 per cent above the 52-week low.

Price Performance (in percentage)

The shares of the Fiat Chrysler Automobiles have delivered a negative price return of 12.66 per cent on a Year on Year (YoY) basis, much better compared to the benchmark index, as the benchmark index gave 28.69 per cent negative return over the same period. In addition, the stock has given a negative price return of approximately 6.88 per cent on a year-to-date (YTD) time frame and was down by approximately 5.33 per cent in the last one month.

Simple Moving Average (SMA)

From the Simple Moving Average standpoint, shares traded below the 200-day simple moving average price. Also, the shares traded below its 30-day and 60-day SMA prices.

Relative Strength Index (RSI)

The RSI indicator for the shares of the company for the 3-days, 9-days and 14-days was recorded at 81.75, 55.36 and 48.52, respectively. Also, the stock’s 30-days RSI was recorded at 46.13.