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Fiat Chrysler Profit Increases 69%, Most of It From North America

DETROIT —  Fiat Chrysler Automobiles on Thursday reported a big gain in second-quarter profits and assured investors that its recent record-setting penalty for safety violations would not slow its earnings momentum, reports the New York Times.

The Italian-American automaker said that its net income climbed 69 percent in the quarter to 333 million euros — about $363 million — compared with the period a year ago.

The company’s chief executive, Sergio Marchionne, attributed the gains to healthier profit margins in the North American market and surging sales of Jeep sport utility vehicles.

Mr. Marchionne told analysts that he did not expect any long-term financial impact from the company’s consent order on safety violations reached with the National Highway Traffic Safety Administration.

On Sunday, the agency imposed civil penalties of up to $105 million on Fiat Chrysler for failing to complete recalls in a timely manner and to provide proper notification to consumers, dealers and regulators.

The consent order followed an investigation by regulators into 23 recalls covering more than 11 million vehicles.

Mr. Marchionne said the company was committed to improving its safety practices, particularly in its communications with consumers. “There are no excuses,” he said in a conference call with analysts.

He added that the penalties imposed by the safety agency should not hinder the automaker’s performance.

Fiat Chrysler will pay a $70 million cash fine and is obligated to spend $20 million on a variety of performance issues, including repurchasing Ram pickups with faulty suspensions that can cause drivers to lose control of the vehicles.

Fiat Chrysler could be assessed an additional $15 million in penalties if more safety violations are found by an independent monitor. “Neither us nor N.H.T.S.A. want to see that amount paid,” Mr. Marchionne said.

With its safety issues resolved for now, the company can focus on its growth plans, which include expanding global Jeep sales and revitalizing its Alfa Romeo luxury brand.

Fiat Chrysler revenue in the second quarter rose 25 percent from a year ago to €29.2 billion, or about $31.8 billion. In North America, its profit margins more than doubled, to nearly 8 percent.

General Motors and Ford Motor reported even higher profit margins in North America, where new vehicle sales are reaching their highest levels in several years.

“We are still far away from where our other two competitors are,” Mr. Marchionne said. “It is an indication of the amount of work that needs to be done by F.C.A. in the United States.”

The second-quarter results impressed investors, as Fiat Chrysler’s stock gained 7.3 percent to close at $15.58 in trading on Thursday on the New York Stock Exchange.

The company has several big tasks, including a public stock offering for its Ferrari luxury sports car division.

But on a possible merger between Fiat Chrysler and another automaker, Mr. Marchionne was somewhat circumspect.

In his previous conference call with analysts after first-quarter earnings, Mr. Marchionne created a stir by calling for carmakers to find merger partners to contain costs for new products and technology.

It was later revealed that he had tried to start merger talks with G.M. in March, but his overture was rejected.

On Thursday, he said he still believed mergers made sense for the overall industry. But he did not tip his hand on whether Fiat Chrysler was engaging in such talks with other car companies.

“You need to let us work on this, and I’m sure we will come up with the right answer,” he said.

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