Fiat Chrysler Automobiles reported a better than expected rise in fourth-quarter operating profit on Wednesday as strong results from North America and improving operations in Europe offset weakness in Latin America and Asia.
FCA, the world's seventh-largest carmaker, forecast an adjusted operating profit of more than 5 billion euros and net debt falling to below 5 billion euros in 2016.
FCA shares trading down 2.5 percent at 1200 GMT, with traders saying that while the quarterly performance was very strong and the company impressed with its debt cutting efforts, the guidance for this year was cautious.
Later on Wednesday, FCA will update the market on its 48-billion-euro business plan to 2018. CEO Sergio Marchionne will have his work cut out to convince investors he can deliver the turnaround plan after model delays, deferred investments and slowing demand in Asia and Latin America.
FCA said adjusted operating profit for the October-December period rose 39 percent to 1.64 billion euros ($1.78 billion), compared with an analyst consensus of 1.3 billion euros. Sales rose 11 percent to 30.1 billion euros, also above expectations.
"The results are strong, and guidance is solid, but cautious," a trader said. "And the question remains how FCA will fare should the U.S. market turn."
FCA's North American operations amounted to nearly 85 percent of group profits last year, helped by higher sales of Jeep sport utility vehicles. Its operating margin in the region rose to 7.1 percent in the last quarter as the company seeks to close the gap with larger U.S. rivals GM and Ford.
The fourth-quarter numbers still included luxury unit Ferrari, which was spun off at the start of this year. Including the effects from the separation, net industrial debt fell to 5 billion euros from 7.85 billion at the end of September.
(Additional reporting by Danilo Masoni; Editing by Keith Weir)