By Stefano Rebaudo and Laurence Frost
MILAN/PARIS (Reuters) - Fiat Chrysler's
Trading was briefly suspended after the shares tumbled more than 9 percent, before resuming their decline to close almost 12 percent lower at 7.48 euros, with investors still digesting Tuesday's strategy presentation in Detroit.
Under the plan, outlined in 10 hours of analyst meetings, Marchionne pledged to multiply sales, raise profitability and slash debt by 2018, while investing 48 billion euros ($67 billion) in a global expansion led by the Jeep, Alfa Romeo and Maserati brands.
"These targets were almost unnecessarily bullish, leaving multiple execution challenges - even if they won't be tested for several years," said Citi analyst Philip Watkins.
Quarterly earnings, also published late on Tuesday, were a "major disappointment" that served to underline the challenge, Watkins added in a note.
Fiat Chrysler swung to a 319 million euro net loss in January-March from a 31 million profit a year earlier, missing expectations with a 622 million euro trading profit.
The shares, which had risen 44 percent since Fiat announced a January 1 deal to take full control of Chrysler, opened late in Milan as a result of heavy trading volumes.
"The first quarter was a timely reminder of the risks associated with Fiat's plan," said Rabih Freiha of Exane BNP Paribas, citing North American pricing pressure that the brokerage expects to cause more trouble for Chrysler.
The promise to cut debt to 1 billion euros from an expected 11 billion peak next year was "one figure that we believe even the bulls will have trouble justifying", Freiha added.
Marchionne, who vowed to remain at the helm of the company for the duration of the five-year plan, said on Tuesday it represented a new start for a combined group that has benefited from a strong U.S. rebound while struggling through Europe's prolonged crisis.
But the 61-year-old CEO conceded that the plan's success was not a certainty.
Early results will soon become apparent and the company can "put the brakes on the process if it doesn't work", Marchionne said, adding that he was "worried" by the size of the debt.
Other analysts suggested the group would have to raise new share capital, a move Marchionne had sought to rule out while leaving the door open to a mandatory convertible bond issue.
"Fiat's massive plan, and the necessary capital expenditure and R&D, simply do not look affordable or prudent," said Max Warburton of Bernstein Research.
Calling its financial targets "enormously optimistic", Warburton said: "Fiat would do everyone a favor, including its employees, management and shareholders, by raising capital."
(Additional reporting by Bernie Woodall in Detroit and Lisa Jucca in Milan; Editing by Mark Potter and Pravin Char)