Fiat makes Q3 profit of $236M, raises outlook

[October 21, 2010]  MILAN (AP) -- Italian automaker Fiat Group SpA, which controls U.S.-based Chrysler LCC, raised its 2010 forecasts after net profits rose to euro170 million ($236 million) from euro21 million a year earlier due to higher sales of trucks and tractors.

As a result of the strong results, Fiat raised its 2010 targets, saying revenues would top euro55 billion -- euro5 billion more than previously stated. It also said trading profit would be at least euro2 billion, nearly double previous guidance of euro1.2 billion.

The Turin-based company also said its plans to spin off the industrial business, including CNH farm and construction machinery, and Iveco trucks, from the core auto business was on track to take effect in January.

Fiat shares rose 3.92 percent to euro12.18 in Milan trading on the news.

It was Fiat's second consecutive quarter of positive earnings, as the auto industry struggles to recover from the worst crisis to hit the sector.

Fiat said group revenues were up 12 percent to euro13.5 billion in the period, with the strongest results in the farm and truck businesses. Revenues at its CNH farm machinery business rose 32 percent to euro3 billion while revenues at the trucks unit Iveco were up 15 percent to euro2 billion.

Auto revenues were flat at euro6.6 billion, with the contracting passenger car market offset by strong sales of light commercial vehicles and favorable exchange rates, Fiat said. Trading profit for the car business was euro130 million, down 16 percent from euro155 billion.

Car deliveries were down 15.7 percent to 391,000, with steep declines in Italy and Germany as the expiration of cash-for-clunkers schemes took the bottom out of sales.

Light commercial vehicle sales rose 21 percent to nearly 90,000 units.

Fiat shareholders have approved the separation of the auto and industrial vehicle businesses into two distinct companies, a key step toward CEO Sergio Marchionne's goal of creating a global car company with Chrysler LCC able to produce 6 million cars a year by 2014.

The demerger marks a historic shift for Fiat, Italy's largest employer, which was founded 111 years ago as an auto company and grew into a conglomerate encompassing a broad range of products all powered by engines, from Ferrari sports cars to CNH farm equipment.

Marchionne has said the move will give both businesses greater flexibility to seek strategic alliances.

The spinoff of the industrial side, which would take effect Jan. 1, will create Fiat Industrial SpA, comprising CNH farm and construction equipment, Iveco trucks and FPT Industries and Marine activities.

Fiat SpA, on the other hand, will include Fiat Group Autos, the owner of Fiat, Alfa and Lancia, as well as Maserati and 85 percent of Ferrari, plus components and other related assets.

[Associated Press; By COLLEEN BARRY]

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