Fiat slashes targets due to languishing Europe sales
By Jennifer Clark, Reuters
November 1, 2012, 1:09 am TWN
MILAN -- Fiat S.p.A. sharply cut its performance targets for the next two years, saying languishing sales in austerity-hit Europe may lop off a third of its previous projections for 2014 trading profit.
The sharp downturn in Europe has forced chief executive Sergio Marchionne to focus on bolstering Fiat's operations on Europe instead of buying more shares in Chrysler Group LLC, the U.S. automaker in which Fiat has a 58.5-percent stake.
Marchionne, who runs both Fiat and Chrysler, repeated his plans to merge the two automakers into a single car company by 2014 or 2015, but said Europe took center stage.
"Our primary objective right now is that of fixing the European environment," Marchionne told analysts and reporters on a conference call on Tuesday.
The Italian automaker now expects its 2014 trading profit to be between 4.7 billion to 5.2 billion euros, down from its earlier forecast of 7.5 billion euros. Net industrial debt in 2012 could hit 6.5 billion euros, up to 1 billion euros above the previous projection.
The Turin-based company also expects to sell 4.6 million to 4.8 million vehicles in 2014, not the 6 million it forecast in a five-year plan outlined in 2010, back when Europe seemed ready to recover from the global financial crisis.
Fiat, which reported slightly better-than-expected third-quarter profits on Tuesday, said again that it did not plan to shut European factories, unlike some of its competitors.
Instead, it promised to increase investment and return its European operations to profitability in 2015-2016 by developing "global brands Alfa Romeo, Maserati, Jeep and the Fiat 500 'family.'" Marchionne acknowledged the risk involved in investing and avoiding factory closures, while the European market was shrinking.
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