Fiat Chrysler shares extend losses after CEO's consolidation plea
MILAN (Reuters) - Milan-listed shares in Fiat Chrysler Automobiles (FCA) hit their lowest in more than two months and were briefly suspended from trade on Thursday, a day after its CEO called for large-scale consolidation in the car industry.
The share price had tumbled nearly 5 percent on Wednesday after Sergio Marchionne renewed his plea for shrinking the number of players in the global auto sector to sustain the heavy capital investments needed to meet demands for cleaner, safer vehicles.
The stock fell more than 6 percent on Thursday morning, touching lows last seen in mid-February, and was down 4 percent to 13.6 euros by 0929 GMT.
At the start of Wednesday's presentation, which followed FCA's release of lower-than-expected first-quarter results, Marchionne said the aim of the discussion was not to put the company up for sale, but analysts were not convinced.
"Marchionne is a shrewd operator and rightly investors have been asking what was the purpose of yesterday's presentation and what was Marchionne trying to achieve," said Arndt Ellinghorst, an analyst at Evercore ISI.
"In our view the answer is very simple; he is looking to force a marriage for FCA."
Sources told Reuters earlier this month that Marchionne was hoping for a big deal, possibly in the United States, to plug the carmaker's weaknesses and cement his legacy before stepping down in early 2019, but that he may struggle to find a partner.
Traders said Marchionne's comments put some of FCA's own difficulties in the spotlight, notably its debt pile -- among the industry's biggest --, weak margins in its profit engine North America and a flagging Latin American business due to a weak economic scenario outside the carmaker's control.
The difficulties are likely to become even more apparent as the North American car market, now at its peak, turns around.
"The company holds together operationally due to an intense management focus and disciplined financial control. But it hardly looks in good shape to withstand a downturn," said Max Warburton, an analyst with Bernstein.
(Reporting by Agnieszka Flak; Editing by Gareth Jones)
