Italian automaker Fiat SpA, which controls U.S.-based Chrysler LCC, reported a first-quarter loss of 25 million euros ($34 million) and forecast its auto business will be hurt this year by the elimination of cash-for-clunker programs in Europe.
The results released Wednesday improved on last year's first-quarter loss of 410 million euros as revenues rose, with the auto business taking residual benefits of the slowing cash-for-clunkers programs.
First quarter revenues were up 14.7 percent to 12.9 billion euros, compared with 11.2 billion euros a year earlier.
Fiat Group Automobiles posted a 22 percent increase year-on-year with revenues of 6.8 billion euros on deliveries of 532,400 cars and light vehicles, benefiting from the last gasps of incentive schemes in some European countries, which are being eliminated and phased out this year. Fiat also saw positive results at its agriculture equipment unit thanks to cost cutting, and trucks unit on sector recovery.
"The automotive business continues to be the biggest source of revenue for this group," CEO Sergio Marchionne told analysts, saying that it contributed more than half of the results and benefited from a more favorable sales mix than a year earlier.
Fiat more than doubled trading profit — or operating profit less extraordinary items — at its CNH agricultural equipment unit, to 127 million euros from 49 million euros — on cost cutting that offset lower sales in Europe and North America. CNH revenues were flat. Fiat's Iveco truck business posted an 11.2 percent increase in revenues to 1.7 billion euros, reflecting early signs of recovery.
The picture was more mixed in automobile sales as incentive schemes wound down. In Italy, for example, Fiat posted revenues in the first quarter on cars ordered in December under the incentive schemes, which were not extended.
The cancellation of incentives in Germany saw Fiat's volumes plunge there by 73 percent — which is reflective of Fiat's concerns for 2010.
Fiat said the programs' elimination this year will hurt its automobile business — the core driver of its earnings — with deliveries expected to drop 15 percent this year. But Marchionne said the auto business "will still make a positive contribution nonetheless." He forecast break-even net profit with 2009, and a trading profit of 1.1 billion euros to 1.2 billion euros.
Fiat shares slid 2.88 percent to 10.12 euros after the earnings were released, following gains on Tuesday after the announcement that Agnelli heir John Elkann would become chairman.
Fiat released its January-March earnings ahead of a presentation outlining its five-year business plan, including new model launches and tighter integration with Chrysler. Fiat took an initial 20-percent stake in the bankrupt automaker last June.
CEO Sergio Marchionne also has said Fiat will indicate plans for any spinoff of the auto unit.
Earlier Wednesday, the board confirmed the 34-year-old Elkann, heir to the Agnelli industrial dynasty and Fiat's major shareholders, as the group's chairman, replacing Luca Cordera di Montezemolo.
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