ROME (AP) _ Fiat SPA said Monday second-quarter earnings rose 56
per cent as it extended a turnaround and strong sales of its
flagship compact car led to the third straight quarterly trading
profit in the core auto unit.
The Turin-based automaker, which has sold off noncore assets and
drafted an ambitious schedule of new model launches, also raised its
earnings forecasts for the year.
Group net profit for the quarter came to 280 million euros
(US$353 million), up from 180 million euros ($227 million) in the
same period a year earlier. Revenue rose to 13.61 billion euros
($17.2 billion) from 12.1 billion euros.
The results were underpinned by the resurgence of Fiat Auto,
which has been helped by sales of its Grande Punto. The auto unit
posted a trading profit for the quarter of 88 million euros ($111
million) _ reversing a trading loss of 88 million euros a year
Analysts track the trading profit _ earnings before restructuring
costs and one-time items from equity investments _ since net profit
numbers have been skewed by asset sales.
On that basis, the auto unit exceeded by 10 million euros the
amount that analysts were expecting, and chief executive Sergio
Marchionne raised his full-year earnings outlook.
Fiat now sees a full-year trading profit at the auto division of
250 million euros ($316 million), up from 200 million euros expected
previously, and a full year net profit at group level of about 800
million euros ($1 billion), up from the 700 million euros it
Last year, aided by cost-cutting, Fiat snapped a 17-quarter
string of losses that threatened to shut down the crown jewel of
But the success of the new Grande Punto helped increase Fiat's
European market share to 7.7 per cent in the first half of 2006, and
Fiat Auto posted overall sales of more than one million units in the
first half of the year for the first time since 2001.
Fiat had reached ``many of its objectives'' and attributed much
of the success to Fiat Auto's progress, Marchionne said at a news
``We still have a lot of way to go, but it is the first time that
we can look at the industrial end'' positively, the CEO was quoted
as saying by the Italian news agency ANSA.
Key elements in Fiat's turnaround are its partnership deals with
eight companies, including PSA Peugeot and Ford Motor Co. (NYSE:F),
aimed at sharing development costs and giving Fiat footholds in
markets such as India and China.
In the days before the second-quarter results, there was
widespread speculation that Fiat would expand its alliance with
India's Tata Motors Ltd.
Marchionne said that it was ``still too early to talk about
possible developments with Tata Motors,'' according to ANSA. ``At
the moment, we are still working and I find it premature to talk
about it now.''
But, Marchionne emphasized, alliances were a key part of Fiat's
``I think that there will be fresh announcements (about
alliances), but this will come at the opportune moment,'' Marchionne
was quoted as saying. ``We are working very hard. We are counting on
making additional alliances.''
The company also announced Monday that it had extended its
production and distribution agreement with Russia's Severstal Avto
to produce its light truck Ducato model in the Elabuga area, in the
Fiat also said it signed a joint venture in the consumer credit
business with French bank Credit Agricole SA. Credit Agricole and
Fiat will establish a joint venture called Fiat Auto Financial
Services, which will operate Fiat Auto financial services all over
Europe. Fiat said the joint venture would be valued at 2 billion
euros ($2.5 billion).