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 Turin-based Fiat, which this month bought out Chrysler's minority
investor in a $4.35 billion deal, said on Wednesday the new Fiat
Chrysler Automobiles (FCA) group would have its primary listing in
New York, with a secondary listing in Milan.
The holding company will be registered in the Netherlands and have
its tax domicile in Britain, cementing a politically sensitive shift
away from Italy, although Fiat said the decision would have no
impact on jobs in Italy or elsewhere.
Five years after Fiat helped to rescue Chrysler from bankruptcy, the
U.S. business has become a key profit center for the group, helping
to offset a six-year European market slump.
Latin America has also become important. But Fiat said on Wednesday
core earnings in the region plunged 80 percent in the final quarter
of 2013, dragging group results below expectations and leading it in
part to lower its expectations for this year.
"The results were disappointing and fell short of expectations. Fiat
is a restructuring story. It needs time," said Gabriele Roghi, head
of investment at Invest Banca.
At 1420 GMT, Fiat shares were down 5.8 percent at 7.1 euros, one of
the biggest falls by a European blue-chip stock <.FTEU3>.
Fiat said it now expected a 2014 trading profit of 3.6-4.0 billion
euros, down from a range of 4.7-5.2 billion euros given in October
2012 and below analysts' forecast of 4.15 billion.
The company said it would not pay a dividend on 2013 earnings to
preserve cash after completing its acquisition of Chrysler to create
the world's seventh-largest carmaker.
NEW DOMICILE
Fiat said it was moving the tax domicile of the merged automaker to
Britain even though it said this would not affect its tax burden in
the countries where it operates.
It said it was shifting the primary listing to New York to benefit
from a more liquid market.
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While analysts have widely welcomed the Chrysler deal, which Fiat
boss Sergio Marchionne funded without a rights issue and more
cheaply than anticipated, they have been more skeptical about the
group's rising debt and the ability of the 61-year-old executive to
turn the Fiat part of the business around. At 9.8-10.3 billion euros, Fiat's forecast of net debt for 2014 is
lower than analysts' expectations.
But the group risks having to issue more debt to fund a three-year
investment plan that is due to be announced in May.
Fiat reported a fourth-quarter group trading profit of 931 million
euros ($1.27 billion), compared with a restated 887 million the
previous year and analysts' consensus forecast of 1.15 billion
euros.
Analysts said the sudden and sharp slowdown in Latin America was the
main concern. Brazil alone used to account for about one fifth of
Fiat profits.
"The key question is whether this decline is now structural," Citi
analysts said in a note.
Fiat's operations in Latin America were primarily hit by an end to
car sales incentives in Brazil and a cooling off of local economies.
The group managed to reduce its losses in Europe, and surprised to
the upside by a strong performance of its luxury brands, especially
Maserati.
Chrysler's fourth-quarter net income rose 329 percent to $1.62
billion, but included a $962 million non-cash tax benefit.
(Additional reporting by Stephen Jewkes
and Isla Binnie in Milan, editing by Lisa Jucca and Mark Potter)
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