Fiat raised its full-year earnings targets

Article by Christian Andrei, on July 26, 2011

After Fiat S.p.A. consolidated Chrysler Group into its earnings, it then moved to raise its earnings targets for the full year. Last Tuesday, Fiat said that for 2011, it will post earnings before interest, tax and one-time items (referred to as trading profit) of about 2.1 billion euros ($3 billion) and will have revenue of over 58 billion euros.

Fiat’s previous target, which excluded Chrysler, had been for a trading profit of up to 1.2 billion euros and 37 billion euros in sales.

Its trading profit in the second quarter increased by 71% to 525 million euros from 307 million euros a year ago. Profit had surpassed the 494 million-euro average that Bloomberg arrived at from its survey of nine analysts.

Its revenue increased by 40% to 13.2 billion euros. Sergio Marchionne, who is the CEO of both Fiat and Chrysler, is working on plans for a merged management structure for Fiat and Chrysler as he proceeds to merge the two.

Last week, Fiat raised its Chrysler stake to 53.5%. Fiat earnings include Chrysler results starting on June 1. Marchionne wants to combine the two carmakers to cut costs and reach its goal of more than 100 billion euros ($140 billion) in revenue by 2014.

Last week, Goldman Sachs analyst Stefan Burgstaller told investors that what Fiat provides is a “unique combination of structural and operational value creation.” Burgstaller, who has a “buy" rating on the stock, said that there will be “further operational upside" if it succeeds in implementing its five-year plan.

Topics: fiat

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