Fiat expects drop in earnings in first quarter of 2013

Published by Eugene Conan @eugene4wheels Google+ | Friday March 22, 2013

Fiat expects drop in earnings in first quarter of 2013

Fiat expects to post a drop in its earnings in the first quarter of 2013, but confirms its full-year forecast for gains in trading profit, or earnings before interest, taxes and one-time gains or costs. The expected drop in first-quarter earnings comes as Chrysler Group's Jeep brand suffered a sales slump in the US while car demand in Europe continues to fall.

Sergio Marchionne, chief executive of both Fiat and Chrysler, remarked that while the first quarter would not be a “great” one, the important thing is that they are confirming their 2013 targets. Marchionne remains pessimistic of the situation in Europe, saying that there is no certainty when sales crisis in the region will end.

Marchionne is banking on Chrysler to prop up Fiat’s earnings as he tries to cut losses at the carmaker’s volume brands in Europe, which already worsened to over EUR700 million ($912 million) in 2012. Fiat would have logged EUR1.04 billion in losses in 2012 if not for Chrysler. The Italian carmaker is planning to hike its trading profit to up to EUR4.5 billion in 2013 from EUR3.81 billion in 2012.

Fiat is one of the four carmakers – along with General Motors, Ford Motor Co. and PSA/Peugeot Citroen – planning a combined 30,000 job cuts in Europe in a bid to match the demand in the region. The carmakers led a 10-percent drop in car sales in Europe in February 2013, according to latest industry figures.

Marchionne's turnaround plan in Europe entails 16 new upscale cars -- including an Alfa Romeo sports utility vehicle and a small Jeep SUV as well as six models at its luxury Maserati unit. Fiat’s new vehicles will help the carmaker fill capacity at its underused plants in Italy.