Fiat’s Chrysler May Report $99 Million Fourth-Quarter Net Loss
Chrysler Group LLC, the U.S. automaker run by Fiat SpA, may report a fourth-quarter net loss of $99 million, the average of three analysts’ estimates, after U.S. sales declined from the third quarter.
The fourth-quarter loss would exceed the $84 million deficit from the previous quarter. Chrysler on Jan. 31 will probably post an operating profit for the quarter of $186 million, according to the analysts. Chief Executive Officer Sergio Marchionne has said that high interest rates on government loans have kept Chrysler from reporting a net profit, Bloomberg reported.
While Chrysler’s U.S. deliveries rose 23 percent in the fourth quarter from a year earlier, sales fell from the third quarter, according to researcher Edmunds.com. The Auburn Hills, Michigan-based automaker’s U.S. sales fell 9.8 percent in the fourth quarter of last year compared with the preceding three months, Edmunds said.
Chrysler’s “business has gone well,” Marchionne said today, and its results are “in line with guidance.”
Chrysler in November raised its operating profit estimate for the year to $700 million, implying a $135 million fourth- quarter operating income. The automaker had earned $565 million on that basis through three quarters. Max Warburton, an analyst with Sanford C. Bernstein in London, called the guidance “conservative” at the time.
Operating profit was $239 million in the third quarter.
Fiat, the parent company, reported a third consecutive quarter of net income today, powered by Iveco trucks, Case New Holland tractors and auto demand in Brazil. Net income reached 318 million euros ($436 million), compared with a 283 million- loss a year earlier, the Turin-based company said today.
The results are for Fiat Group before the company spun off its industrial businesses into Fiat Industrial SpA this month.
Trading Profit
Fourth-quarter earnings before interest, taxes and one-time items, which Fiat calls trading profit, rose 26 percent to 615 million euros, exceeding the 598 million-euroaverage estimate of 13 analysts surveyed by Bloomberg.
Marchionne, 58, separated Fiat’s trucks and tractors units to focus on making cars. Italy’s largest manufacturer led a ninth consecutive monthly decline in European car sales in December as demand waned after government incentives expired. Fiat Industrial shares fell in Milan after the CEO didn’t raise 2011 forecasts.
2011 Outlook
Fiat forecast industry car sales in 2011 in Europe will fall 3 percent, according to a slide presentation posted on its website today.
The Brazilian car market may grow by as much as 5 percent, the company said. Fiat expects to maintain its market share in Brazil and improve it in Europe in the second half, it said.
CNH Global NV, the agricultural equipment maker that is part of Fiat Industrial, today reported fourth-quarter net income of $209 million, compared with $28 million a year earlier. Net equipment sales jumped 17 percent to $3.8 billion.
Marchionne, who aims to improve productivity and capacity utilization in Italy, this month won workers’ concessions over a 1 billion-euro plan to revamp Fiat’s Mirafiori factory.
Fiom Cgil, Fiat’s biggest union which represents 10,000 of the carmaker’s 83,000 workers in Italy, opposes the deal and has called a general strike tomorrow among metalworkers against the CEO’s plan to curtail absenteeism and strike rights.
Fiat intends to produce as many as 280,000 cars and SUVs annually at Mirafiori for the Jeep and Alfa Romeo brands as part of its venture with Chrysler. Production is scheduled to begin by the fourth quarter of next year.
Chrysler Future
Chrysler needs to sell about 1.5 million vehicles annually to break even on an operating basis, down from 1.65 million, Marchionne said Jan. 12. Global sales in 2010 rose about 21 percent to 1.6 million cars and trucks, he said.
Chrysler is expected to sell “a minimum” of 500,000 vehicles in the Asia-Pacific region by 2014, Marchionne said today on a conference call with analysts. Those sales rose to 39,688 last year, a 17 percent increase from 2009, Ralph Kisiel, a Chrysler spokesman, said today in an e-mail. The majority of those deliveries, 23,428, were in China.
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