Fiat posted a 29-percent jump in trading profit for the fourth quarter of 2012 to EUR987 million ($1.34 billion), from EUR765 million in the same period in 2011. The Italian carmaker attributed the increase in its fourth-quarter earnings before interest, taxes and one-time items to brisk sales of Jeep models as well as to the lower loss in its European operations.
Fiat posted a EUR165-million loss in Europe in the fourth quarter of 2012, significantly lower compared to the EUR289-million loss in the same period in 2011. Fiat chief executive Sergio Marchionne does not expect the carmaker to further increase its losses in Europe in 2013, after the company posted a EUR738-million loss in 2012. Marchionne said prior to the earnings release that their financial situation in Europe would not be “drastically different in 2013."
He noted that they are “working at the speed of light" to meet Fiat’s target of achieving a breakeven in Europe by 2016 at the latest. To maintain its liquidity, Fiat did not recommend a dividend for 2012, as the carmaker has a net industrial debt of EUR6.55 billion at the end of the year. The need for a financial U-turn in Europe was further highlighted when Chrysler Group, a unit of Fiat, reduced its free cash flow forecast for 2014 from $3 billion to $1 billion.
Chrysler posted a 68-percent increase in net income in the fourth quarter of 2012 to $378 million. Fiat is aiming to patch up its European operations before going ahead with a planned merger with Chrysler, in which the Italian carmaker holds 58.5-percent stake. Fiat’s turnaround plan in Europe entails 16 upscale cars -- including an Alfa Romeo SUV, a small Jeep and six models at the luxury Maserati division – to be built at under-utilized plants in Italy.