2nd UPDATE: Fiat Posts 2Q Net Loss, Confirms 2009 Targets
23 July 2009 - 12:42AM
Dow Jones News
Italy's Fiat SpA (F.MI), which refrained from the latest bidding
for General Motors Co.'s Adam Opel GmbH to focus on restructuring
Chrysler Group LLC, stuck Wednesday to its 2009 targets despite a
net loss for the second quarter on lower sales.
"We expect an improvement in the remainder of the year, as
trading conditions stabilize and improve for most of our
businesses," said the industrial group, whose car division
benefited from government incentives to buy smaller, fuel-efficient
cars in many European countries.
But its Iveco truck and CNH Global NV (CNH) construction
businesses would remain depressed for most of 2009 due to
recession, with signs of recovery visible only in the fourth
quarter, it said.
CNH, a U.S. subsidiary that also makes farming equipment,
suffered a 21% drop in revenue, and revised downward its unit sales
forecast for the year to a 25% to 30% drop from a range of 15% to
25%.
However, Fiat confirmed its 2009 targets, including a net profit
of more than EUR100 million and a net industrial debt of less than
EUR5 billion.
The debt level, a cause for investor concern, fell to EUR5.7
billion at the end of the quarter from EUR6.6 billion at the end of
the first quarter. Cash rose to EUR6.4 billion, up EUR1.3 billion
from the first quarter.
At 1407 GMT, Fiat's shares traded down 2% at EUR7.78, while the
benchmark FTSE MIB index traded up 0.6%. Although the results were
in line if not better than expectations, analysts pointed to CNH's
sales forecast downgrade as one reason for investors locking in
profits after the stock outperformed its peers by gaining 68% in
value this year.
Like other car makers, Fiat has been struggling to cut costs and
work down its debt in an industry crisis that has seen a sharp drop
in sales.
Although government incentives have provided some relief,
analysts expect 2010 to be a difficult year when many of these
incentives have expired.
In the first half of the year, Fiat had the smallest unit sales
drop among Europe's main car makers, down 1.1%, allowing it to
surpass French rival Renault SA (RNO.FR) as the region's
fifth-biggest car maker with a 9.1% market share.
Worldwide, Fiat sold 591,000 cars and light trucks in the
quarter, down 8.3%.
Fiat Chief Executive Sergio Marchionne is looking to increase
scale at the car business to reach an annual production of more
than 5 million cars, which he deems crucial to survive the
crisis.
After taking an initial 20% stake in Chrysler, the acquisition
of Opel would have helped him reach that goal. But he refused to
raise his offer after other contenders appeared.
Fiat has since agreed to form a joint venture with Guangzhou
Automobile Group Co., Ltd. to make cars and engines for China, and
it said Wednesday it would keep looking for alliances to optimize
capital commitments and reduce risks.
For the quarter, Fiat posted a net loss of EUR179 million
compared with a net profit of EUR646 million in the same period a
year ago. The loss was bigger than the median of forecasts of
EUR110 million compiled from a survey of analysts by Fiat. Revenue
fell 23% to EUR13.2 billion.
Company Web site: www.fiatgroup.com
-Gilles Castonguay, Dow Jones Newswires; +39 02 5821-9908;
gilles.castonguay@dowjones.com