2nd UPDATE: Fiat Raises Targets On Improved Third Quarter
October 21 2010 - 7:14AM
Dow Jones News
Fiat SpA (F.MI) Thursday raised its 2010 targets, as expected,
after its quarterly results beat expectations with a big jump in
net profit on double-digit revenue growth as demand for trucks,
tractors and combines rebounded.
The Italian industrial group raised its expectation for net
profit for the year to about EUR400 million from a previous target
of near break-even.
It predicted revenue in excess of EUR55 billion compared with a
previous target of more than EUR50 billion.
For trading profit, or operating profit before extraordinary
items, it now expects at least EUR2 billion, up from a range
between EUR1.1 billion and EUR1.2 billion.
Net industrial debt is now expected to be slightly below EUR4
billion compared with an earlier target of more than EUR5
billion.
Fiat Chief Executive Sergio Marchionne had told reporters at the
Paris motor show in September of the likelihood of a target
revision.
This revision and the robust third-quarter results come on the
back of a recovery in its Iveco truck and CNH (CNH) construction
and agricultural vehicle businesses.
Its core car business, however, suffered a drop in operating
profit on flat revenue.
Fiat's group net profit in the quarter ended Sept. 30 climbed to
EUR190 million from EUR25 million in the same period a year
earlier. The figure beat the EUR60 million expected by analysts,
according to an average calculated from a Dow Jones Newswires and
FactSet poll.
Revenue rose 12% to EUR13.5 billion.
Fiat said its car business, which includes brands like Fiat and
Alfa Romeo, would be hurt by the reduction and elimination of
government incentives to buy small, environmentally friendly cars
in western Europe. As Europe's sixth-largest car maker by market
share, Fiat is best known for its small cars and it had benefited
from these incentives last year.
At 0954 GMT, Fiat shares traded up 3.8% at EUR12.17 in Milan as
investors focused on news of the revised targets.
"(The) market was expecting Fiat to raise (full-year) guidance.
However, the magnitude was bigger" than envisaged, UBS analyst
Philippe Houchois said in a note.
CNH and Iveco, the two businesses within the group that had
suffered heavy losses last year as a result of the crisis, produced
buoyant results as demand in Asia and Latin America helped
compensate for slower business in traditional markets like Europe
and the U.S.
CNH saw total revenue rise 32% to EUR3 billion. Revenue for its
construction equipment soared 71%. CNH's trading profit more than
doubled.
At Iveco, revenue climbed 15% to EUR2 billion and trading profit
also more than doubled.
Fiat plans to split itself into two by the end of the year. The
break-up will create two companies: Fiat SpA for passenger vehicles
and Fiat Industrial SpA for Iveco and CNH.
Fiat Industrial SpA is waiting for regulatory approval to list
its stock Jan. 3 in Milan where Fiat SpA also is listed. CNH will
continue trading separately in the U.S.
Fiat SpA will retain its minority stake in Chrysler Group LLC,
Fiat's U.S. partner.
French car maker PSA Peugeot-Citroen (UG.FR) raised its forecast
for the year Wednesday. With revenue rising 10% in the third
quarter, it expected to achieve an operating profit for 2010 of
more than EUR1.5 billion in 2010.
-By Gilles Castonguay, Dow Jones Newswires; +39 02 5821-9908;
gilles.castonguay@dowjones.com