Fiat Losses Worse than Expected

Fiat narrowed its losses for the second quarter running in July-September, but the car business that had dragged the Italian industrial group into crisis posted disappointing results and pulled its shares lower.

Fiat Losses Worse than Expected

Fiat narrowed its losses for the second quarter running in July-September, but the car business that had dragged the Italian industrial group into crisis posted disappointing results and pulled its shares lower.

Fiat Auto on Friday posted a third-quarter operating loss of 314 million euros, better than last year's 340 million euro loss but worse than the gloomiest estimate in a Reuters poll of analysts, which had forecast the unit would be 272 million euros in the red.

For the group, the third-quarter operating loss narrowed to 285 million euros ($333.6 million) from 339 million euros a year ago. A Reuters poll of 11 analysts had forecast a 246 million euro loss.

A steep slide in car sales and huge debts dragged Fiat into its worst-ever crisis last year, forcing a spate of asset sales and capital increases to fund a turnaround that aims to push the group to breakeven next year and Fiat Auto into the black in 2005.

Earlier this month, Fiat Chief Executive Giuseppe Morchio told Reuters the third quarter would only be "slightly better" than a year ago.

"The auto loss appears to be greater than expected, but I don't see much of a reason to get more negative about 2004," said Adam Jonas, an analyst at Morgan Stanley.

Fiat reiterated that two new cars that have come on sale in the last few weeks should allow the truck-to-components group to make a "significant improvement" in the fourth quarter and repeated that its full-year loss should narrow from last year's.

"The stock took a bit of a hit on the results, but the test starts now and our eyes have to be on what's left of this year and early 2004. For example, I doubt they can make their market share targets," said a Milan-based analyst.

Fiat shares were down 1.4 percent at 6.71 euros by 1257 GMT, underperforming a 0.7 percent rise in European auto stocks, after earlier falling by more than two percent.

Revenues Fall

Fiat group revenue fell 18 percent to 9.837 billion euros in the third quarter, reduced by the sale of its most profitable units, insurer Toro and aviation arm Fiat Avio, to help fund a turnaround at Fiat Auto.

At Fiat Auto, which is battling to reverse a slump in sales that caused its crisis, turnover fell 11 percent to 4.155 billion euros. In unit terms, sales dropped 6.8 percent.

"Fiat Auto might be improving its costs, but it still faces huge challenges to the top line," said Morgan Stanley's Jonas.

Analysts also were concerned by low margins at Fiat's other units. Sports car unit Ferrari had a three percent operating profit margin, while tractor unit Case New Holland, battling through a long restructuring, posted a 1.1 percent margin.

"The other units are just breaking even and are definitely not generating the cash-flow that Avio and Toro used to. It really just makes Fiat much more dependent on Fiat Auto's recovery than at any time over the past decade," Jonas said.

The group net loss for the third quarter came in at 84 million euros against a net loss of 413 million a year ago, boosted by a 781 million euro net capital gain on the sale of Fiat Avio.

Net debt fell below a key three billion euro mark for the first time in months at 2.952 billion euros at end-September.

shares
comments
Williams sticks with Gene

Previous article

Williams sticks with Gene

Next article

Button Praises Bahrain's F1 Circuit

Button Praises Bahrain's F1 Circuit
Load comments
The other notable Monza escape that F1 should learn from Plus

The other notable Monza escape that F1 should learn from

OPINION: The headlines were dominated by the Italian Grand Prix crash between Max Verstappen and Lewis Hamilton, who had the halo to thank for avoiding potentially serious injury. But two days earlier, Formula 1 had a lucky escape with a Monza pitlane incident that could also have had grave consequences

How Monza only added more questions to F1's sprint race conundrum Plus

How Monza only added more questions to F1's sprint race conundrum

With two sprint races under its belt, Formula 1 must now consider its options for them going forward. While they've helped deliver exciting racing on Sundays, the sprints themselves have been somewhat lacking - creating yet another conundrum for F1 to solve...

Formula 1
Sep 16, 2021
Who should Alfa Romeo sign for 2022's F1 season? Plus

Who should Alfa Romeo sign for 2022's F1 season?

OPINION: With Valtteri Bottas already signed up for 2022, all eyes are on the race for the second seat at Alfa Romeo next year. Antonio Giovinazzi is the current incumbent, but faces a tough competition from appealing short and long-term prospects

Formula 1
Sep 15, 2021
The "forced break" that was key to Ricciardo's Monza excellence Plus

The "forced break" that was key to Ricciardo's Monza excellence

OPINION: Daniel Ricciardo has long been considered one of Formula 1’s elite drivers. But his struggles at McLaren since switching from Renault for 2021 have been painful to watch at times. Yet he’s recovered to banish those memories with a famous Monza win – built on a critically important foundation

Formula 1
Sep 14, 2021
How Verstappen is ruining his F1 title battle with Hamilton Plus

How Verstappen is ruining his F1 title battle with Hamilton

OPINION: The Italian GP clash between Lewis Hamilton and Max Verstappen followed a running theme in the 2021 Formula 1 title fight. Their close-quarters battles have often resulted in contact - and although Hamilton has shown a willingness to back off, Verstappen must learn to temper his aggression

Formula 1
Sep 14, 2021
Italian Grand Prix Driver Ratings Plus

Italian Grand Prix Driver Ratings

Two drivers produced maximum-score performances as, for the second year in a row, Monza threw up an unpredictable result that left several others ruing what might have been

Formula 1
Sep 13, 2021
Why Ricciardo was set for Monza F1 triumph even without Verstappen/Hamilton crash Plus

Why Ricciardo was set for Monza F1 triumph even without Verstappen/Hamilton crash

The clash between Max Verstappen and Lewis Hamilton was the major flashpoint the 2021 Italian Grand Prix will be remembered for. Yet by this point, race leader Daniel Ricciardo had already done the hard work that would put him in position to end his and McLaren's lengthy win droughts, on a memorable afternoon in Monza

Formula 1
Sep 13, 2021
Why Italian GP success is on for McLaren even if Verstappen dominates Plus

Why Italian GP success is on for McLaren even if Verstappen dominates

For the second time in 2021, McLaren will line up for the start of a grand prix from the first row. It knows it has the chance of “glory” if things go well for Daniel Ricciardo and Lando Norris at the start of the 2021 Italian Grand Prix, but even if they just maintain their grid positions, signs from the rest of the Monza weekend suggest success is very possible for Formula 1’s other orange army

Formula 1
Sep 12, 2021