Sergio Marchionne, the chief executive officer of Fiat, has confirmed the company’s 2011 targets "for now," hoping to dispel worries stemming from a slowing U.S. economy, a weak market in Europe and a drop in shares that has almost halved the company's market capitalization. Specifically, he mentioned that they will not be reviewing the targets for 2011 until the end of the third quarter.
He further stated that the underperformance of the stock had nothing to do with the costs of refinancing the company’s huge financial liabilities, which have increased along with the growing yields on Italian government bonds, and ruled out a capital increase.
He further mentioned that the U.S. market was doing well but that the outlook for Italian and European is bleak. In addition, the Fiat CEO pointed out that the company’s domestic market is now at its lowest since 1996.
The company has a 53.5 percent share of Chrysler, and has been one of top turnaround stories in Europe in the recent years. However, it has been under market scrutiny for its exposure to the U.S. economy after a sell-off of Italian assets that started last month. Shares of Fiat had the poorest performance in the blue chip FTSE MIB index this August, prior to bouncing back this week.
Like the rest of the major players in the auto industry, Fiat has been hit by concerns that a slowdown in the global economy will hurt its revenues. Due to the company’s increasing reliance on Chrysler, which it started merging in its results last June, Fiat is perceived to be especially susceptible to a slump in the United States.