Fiat posts loss
TURIN, Italy (AP)
Italian automaker Fiat SpA, which controls United States-based Chrysler LCC, reported a first-quarter loss of €25 million (US$34 million) and forecast its auto business will be hurt this year by the elimination of cash-for-clunker programmes in Europe.
The results released Wednesday improved on last year's first-quarter loss of €410 million as revenues rose, with the auto business taking residual benefits of the slowing cash-for-clunkers programs.
First quarter revenues were up 14.7 per cent to €12.9 billion, compared with €11.2 billion a year earlier.
Fiat Group Automobiles posted a 22 per cent increase year-on-year with revenues of €6.8 billion on deliveries of 532,400 cars and light vehicles, benefiting from the last gasps of incentive schemes in some European countries, which are being eliminated and phased out this year. Fiat also saw positive results at its agriculture equipment unit thanks to cost cutting, and trucks unit on sector recovery.
"The automotive business continues to be the biggest source of revenue for this group," CEO Sergio Marchionne told analysts, saying it contributed more than half of Fiat's group-trading profit and benefited from a more favourable sales mix than a year earlier.
Group-trading profit, or operating profit less extraordinary items, was €342 million, compared with a first-quarter trading loss of €48 million.
Chrysler Group LLC, where Fiat has a 20 per cent stake, lost a staggering $3.8 billion from the time it left bankruptcy protection June 10 through the end of last year. But the automaker cut its net loss to $197 million from January through March and improved its cash reserves.
The Auburn Hills, Michigan, automaker said first-quarter revenue was $9.7 billion, up three per cent from the fourth quarter.
Trading profit more than doubled at Fiat's CNH agricultural equipment unit, to €127 million from €49 million on cost cutting that offset lower sales in Europe and North America. CNH revenues were flat. Fiat's Iveco truck business posted an 11.2-per cent increase in revenues to €1.7 billion, reflecting early signs of recovery.
The picture was more mixed in automobile sales as incentive schemes wound down. In Italy, for example, Fiat posted revenues in the first quarter on cars ordered in December under the incentive schemes, which were not extended.
The cancellation of incentives in Germany saw Fiat's volumes plunge there by 73 per cent which is reflective of Fiat's concerns for 2010.
Fiat said the programmes' elimination this year will hurt its automobile business, the core driver of its earnings with deliveries expected to drop 15 per cent this year. But Marchionne said the auto business "will still make a positive contribution nonetheless". He forecast break-even net profit with 2009, and a trading profit of €1.1 billion to €1.2 billion.
Fiat said it would continue to implement "rigorous" cost containment.
Fiat shares slid 3.36 per cent to €10.07 in afternoon trading, following gains on Tuesday after the announcement that Agnelli heir John Elkann would become chairman.
Fiat released its January-March earnings ahead of a presentation outlining its five-year business plan, including new model launches and tighter integration with Chrysler. Fiat took an initial 20-per cent stake in the bankrupt automaker last June.
Earlier Wednesday, the board confirmed the 34-year-old Elkann, heir to the Agnelli industrial dynasty and Fiat's major shareholders, as the group's chairman, replacing Luca Cordero di Montezemolo.
"Notwithstanding his young age, he has now reached the right level of seasoning and maturity to assume the role," CEO Sergio Marchionne said, noting that Elkann "and I have navigated ... through some pretty shark-invested waters," in the last six years.
Staff await journalists taking the new Fiat Bravo car for a test drive after the automobile's launch in Rome January 31, 2007. Fiat brand head Luca De Meo said on Tuesday he aimed to almost double the Italian automaker's share of the most important car segment in Western Europe with the launch of the Bravo.