Fiat Chrysler To Spin-off Ferrari, Posts Q3 Profit - Update

(RTTNews) - Fiat Chrysler Automobiles NV (FCAU), Wednesday announced plans spin-off its luxury sports-car Ferrari unit by selling off 10 percent stake in an initial public offering next year, as the automaker aims to raise funds to enhance growth and fend off its risings debts.

Fiat Chrysler, which listed its shares in New York earlier this month, also reported a 7 percent increase in operating profit for the third quarter while net profit was flat, driven by revenue growth especially in the U.S.

Shares of Fiat Chrysler are currently up 13 percent on the New York Stock Exchange.

Fiat Chrysler detailed plans to separate Ferrari and list a 10 percent stake of the luxury car brand in the U.S. and a European exchange. The company will distribute the remaining Ferrari shares to Fiat Chrysler shareholders. The company also intends to issue $2.5 billion in convertible bonds and 100 million shares.

"As we move forward to secure the 2014-2018 Business Plan and work toward maximizing the value of our businesses to our shareholders, it is proper that we pursue separate paths for FCA and Ferrari," said CEO Sergio Marchionne.

Separately, Fiat Chrysler said its third-quarter EBIT rose 7 percent to 926 million euros from 862 million euros last year.

Net profit for the quarter was 188 million euros, slightly down from 189 million euros last year. Profit attributable to owners of the parent was 174 million euros, compared with a loss of 15 million euros last year.

Revenues for the quarter increased 14 percent 23.6 billion euros, as North America gained 20 percent, Asia Pacific rose 30 percent, and Luxury Brands improved 35 percent.

Moving ahead, Fiat Chrysler confirmed its full-year revenue outlook of about 93 billion euros, EBIT, excluding special items, of 3.6 billion to 4.0 billion euros, and net profit of $600 million to 800 million euros.

"The Group's third-quarter results demonstrate a solid performance in the face of challenging market conditions particularly in Latin America, and we are on track to deliver on our full-year targets for 2014. With the formal creation of FCA and its debut listing on the NYSE, we have embarked on a new phase as a global company with even greater possibilities," said Marchionne.

FCAU is currently trading at $11.00, up $1.28 or 13.12%, on the NYSE.