Fiat Chrysler says to nearly halve net debt in 2017

MILAN: Fiat Chrysler Automobiles (FCA) plans to nearly halve net debt this year, much more than expected and boosting its shares on Thursday as it races to deliver a turnaround plan by the end of next year.

Cutting debt has been a major part of that plan, as the world's No.7 carmaker also looks to invest heavily in lucrative SUV and pickup truck markets.

Strengthening its finances has also become more important since US regulators accused FCA this month of hiding excess diesel emissions, which could lead to hefty fines.

The Italian-American group said net debt would fall to below 2.5 billion euros ($2.7 billion) this year, having already reduced it to 4.6 billion euros at the end of 2016, beating analysts' average forecast of 4.9 billion.

"The market definitely likes the 2017 guidance, especially on net debt and operating profit, which is more aggressive than expected," a Milan-based trader said. Analysts' forecast for end-2017 net debt had stood at around 4 billion euros.

Milan-listed shares in the company jumped nearly 5 percent, hitting their highest since March 2015. The stock was up 3 percent at 10.5 euros by 1135 GMT.

FCA said adjusted earnings before interest and tax (EBIT) and revenues in the fourth quarter both rose 1 percent, roughly in line with forecasts.

The company has been improving earnings throughout 2016, helped by strong performance in North America, improvement in Europe and much better performance at luxury brand Maserati, which launched the long-expected Levante model, its first SUV.

North America accounted for 85 percent of profits last year and the group raised profit margins in the region to 7.4 percent from 6.4 percent as it seeks to close the gap on larger US rivals GM and Ford.

Amid pressure from US President Donald Trump for carmakers to build more vehicles at home, FCA said on Thursday it would invest a total $2.5 billion in three US facilities to expand the Jeep and RAM brands and create 1,700 jobs.

The company said it expected 2017 adjusted EBIT of more than 7 billion euros, up from 6 billion last year, with sales seen rising to 115-120 billion euros, edging closer to 2018 goals.

FCA last year lifted the 2018 financial targets, helped by strong sales of its Jeep SUVs, but doubts remain about its exposure to a peaking US market, weakening pricing there, recall costs and potential fines over diesel emissions.