Fiat Tractors lowers goals for 2009

January 22nd, 2009 | Tags: , , ,

(ANSA) – Rome, January 22 – For the first time since Sergio Marchionne took command of Fiat in 2004 and returned it to profit the following year, the Italian industrial giant has lowered its goals for the year.

After failing to hit its target for net profit in 2008, which amounted to 1.7 billion euros instead of the forecast 2.4-2.6 billion euros, Fiat readjusted its forecasts for 2009 and said net profit will only be ”greater” than 300 million euros, compared to its initial prediction of between 2.9 and 3.1 billion euros.

In a statement issued after the release of results for 2008, Fiat said it expected the first three months of the year would be ”very difficult” for the automaker.

”We hope to see improvements in the following three quarters when the effects of restructuring efforts should begin to be felt,” the statement added. Fiat had already hinted it was lowering its sights last October, when the effects of the economic crunch were taking effect, and painted a worst-case scenario of net profit falling to 400 million euros in 2009.

Fiat’s industrial debt, which it was able to level in 2007 but which jumped to 5.9 billion euros last year, is expected to slip below five billion euros in 2009.

The Italian automaker believes demand for its products will fall this year by 20% over 2008 due to the current global recession. Despite its difficulties, Fiat said it intended to ”strive to achieve our goals and follow our strategy of targeted alliances in order to optimise spending and reduce risk”.

NET PROFITS SHRINK IN 20089 BUT EARNINGS RISE.

Results for 2008 showed that while the Fiat Group’s net profit fell 16.2% over the previous year, after more than doubling it in 2007, trading profit rose by 4% to 3.4 billion euros, with sales of farm machinery, industrial vehicles and Ferrari luxury cars helping to offset the plunge in sales of Fiat’s automobile division. Fiat’s turnover in 2008 amounted to 59.4 billion euros, up 1.5 billion euros from the previous year. This was thanks to earnings for the first nine months, up 8.4% over the same period in 2007, compensating the 17.2% drop in the last quarter. Fiat Group Automobiles – Fiat, Alfa Romeo, Lancia and Abarth and Fiat Professional (commercial vehicles – saw its trading profit last year shrink to 691 million euros, while turnover held at 26.9 billion euros, a marginal gain of 0.5% over 2007. Turnover for Fiat’s farm and construction vehicle unit CNH climbed 7.4% to 12.7 billion euros, with trading profit hitting a record 1.122 billion euros. Fiat’s industrial vehicles division Iveco had a turnover of 10.8 billion euros, down 3.8% from 2007, with a 9.2% drop in sales compensated by higher prices and earnings from other products. Iveco’s trading profit for 2008 was 838 million euros, up 25 million euros from 2007. Ferrari in 2008 saw its turnover leap 15.2% to 1.921 billion euros, with trading profit soaring 27.4% over 2007 to 339 million euros. At the end of 2008, the Fiat Group had 3.9 billion euros in cash in hand, compared to a liquidity of 6.9 billion euros at the end of 2007.

News of Fiat’s 2008 results and the readjustment of targets for 2009 send its stock tumbling on the Milan stock exchange where, after repeated temporary suspensions for excessive losses, it dropped for the first time below four euros a share.

In a related development, Italian Premier Silvio Berlusconi announced that government will hold an emergency meeting on the ailing automobile sector next Tuesday.

The premier said that a ”sharp drop” in the automobile sector required special intervention in the wake of the economic crisis, but added that ”the measures to take must be coordinated with the entire European Union”.
Source; http://www.ansa.it/site/notizie/awnplus/english/news/2009-01-22_122302446.html

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