Fiat lifts outlook after Q2 profit rise
MILAN (AP) — Italian automaker Fiat SpA raised its 2011 forecasts Tuesday after reporting a huge jump in second-quarter profits thanks to the takeover and integration of Chrysler.
Fiat, which controls Chrysler with a 53.5 percent stake, reported second-quarter earnings of euro1.3 billion ($1.9 billion), compared with euro90 million in the same period a year earlier. Revenues rose 40 percent to euro13.15 billion.
The maker of Fiat, Ferrari and Alfa Romeo brands, booked a one-off gain of euro1.058 billion from the takeover of Chrysler after integrating the U.S. carmaker's numbers in its balance sheet on June 1.
Including the integration, Fiat now expects trading profit of euro2.1 billion this year, up from an earlier target of euro1.2 billion. Revenues are forecast at euro58 billion, up from euro37 billion without Chrysler.
"I think that overall the quarter has been a significant quarter for Fiat for a couple of reasons," Fiat and Chrysler CEO Sergio Marchionne told an analyst conference call. "One, we have improved our operating performance. More importantly, it is the first time we are seeing the impact of Chrysler in the consolidated accounts of Fiat."
Chrysler contributed "strongly" to the group results, Fiat said in a statement, generating one-month revenues of euro3.3 billion and trading profit of euro150 million.
Trading profit — or earnings before interest, taxes and one-time items — rose 70 percent to euro525 million, exceeding analyst consensus of euro485 million.
The growth in Fiat revenues, excluding Chrysler, reflected double-digit growth in Fiat's luxury and performance brands as well as sales of components, the company said.
Ferrari deliveries were up 17 percent, on higher volumes of the California and limited series 599 GTO and SA Aperta models. Revenues roes 20 percent to euro589 million with trading profit up 6.5 percent to euro82 million.
"We could not expect them to do more, other than perhaps win the F1 championship, which i think they are working on," Marchionne said.
Fiat Group Autos, which comprises the Fiat, Alfa Romeo and Lancia brands, saw revenues rise 2.7 percent to euro7.6 billion with trading profit flat at euro187 million. A weak European market was offset by higher volumes of light commercial vehicles, the success of the Alfa Romeo Giulietta and strong demand in Brazil.
Fiat became the majority shareholder in Chrysler last week when it completed the purchase of U.S. and Canadian government shares, giving it a free hand to restructure management and drive deeper integration of the company.
Marchionne told analysts he will announce the new management structure — expected to halve the number of direct reports to around 25 — in the coming days.
Fiat expects to raise its stake in Chrysler to 58.3 percent by the end of the year, with the approval of a 40 mpg car for the U.S. market.
Shares in Fiat edged higher after the earnings were released, and were up 0.1 percent at euro7.51 in later afternoon trading, before shedding 4.5 percent to close down euro7.17.