Fiat Swings to Loss

Fiat SpA, the parent of Chrysler Group LLC, reported a loss in its first quarter on the same day its chief executive and top managers unveiled an ambitious five-year plan that proposes to boost vehicle deliveries 60% by 2018.

The plan for Fiat Chrysler Automobiles NV, the Italian-U.S. merger now awaiting Fiat shareholder approval, ultimately is to boost world-wide sales to 7 million by 2018, up from 4.4 million last year.

Sergio Marchionne, the combined company's CEO, has long said that a mass-market car producer can only survive in the cut-throat industry if it sells at least 6 million vehicles a year. Mr. Marchionne engineered Fiat's takeover of Chrysler and is considered by many to be the consummate deal maker, but he has fallen short of ambitious sales targets in the past.

Fiat Group lost €319 million ($444 million) in the first three months of the year, swinging from a net profit of €31 million for the same period last year. The loss included one-time costs connected to Fiat's payoff of a note held by a United Auto Workers union healthcare trust, and currency turmoil in Venezuela. Without those costs, Fiat said it would have earned €71 million. The group lost money on its mass-market brands in the Americas and in Europe, while it made money in Asia Pacific and worldwide on its luxury brands.

Net revenue rose 12% to €22.1 billion, bolstered by gains in North America and Asia as well as improved sales of the company's Ferrari and Maserati luxury brands. Net industrial debt, which excludes the effects of the buyout of Chrysler in early January, was €10 billion at the end of March, €300 million more than at the end of 2013.

The company confirmed its 2014 full year forecast for sales and profit. Earlier this year Mr. Marchionne said trading profit, which strips out interest, taxes and one-time items, would be between €3.6 billion and €4.0 billion on revenue of around €93 billion.

Underlining the challenging competition it faces, Fiat's results came the same day Daimler AG reported April car sales rose 13% on rising demand in the U.S., China and Europe. Last week, Daimler said first-quarter net profit almost doubled to €1.03 billion. On Tuesday, BMW AG also said first-quarter net profit rose 11% to €1.46 billion.

The plan for Fiat Chrysler presented Tuesday during the all-day presentation at Chrysler headquarters outside of Detroit bets on a large jump in the sales of the Alfa Romeo brand, the Jeep sport-utility line and a Chrysler brand that is being repositioned as a high-volume, mass-market competitor. Sales in China are forecast to surge 262% to 850,000 vehicles while North American sales rise 48%.

The company is planning to sell bonds to finance the group's turnaround plan and is also going to refinance existing debt. Mr. Marchionne ruled out an IPO of Ferrari, a move that could have raised much needed cash.

Fiat Chrysler will move its primary listing to New York later this year and keep a secondary listing in Milan. The company will be registered in the Netherlands and have its tax domicile in Britain, cementing a politically sensitive shift away from Italy, Fiat's home for the last 115 years.