Farming spree puts Fiat back into black

• Source: Shanghai Daily
• [08:36 July 22 2010]
• Comments

The Italian auto maker Fiat, which controls Chrysler, Wednesday reported a return to second-quarter profits on improved sales of farm equipment and trucks, and said it may raise its 2010 forecasts.

Fiat also said its board approved the plan to separate its industrial vehicle and auto businesses into two distinct companies to "give birth" to a global automotive company that will incorporate Chrysler LCC. The plan was announced in April.

A second-quarter net profit of 90 million euros ($115.6 million) compares with a loss of 168 million euros in the same period last year. Net revenues were up 12.5 percent to 14.8 billion euros.

The report sent shares in the company 6 percent higher to 9.60 euros in Milan.

Bernstein analyst Max Warburton said the better-than-expected results should lead the way for strong reports across the European auto sector. He had expected Fiat to underperform French and German competitors, which have yet to report, but was forced to revise his assumptions.

"Missing the degree of Fiat's progress in Q2 is probably a classic case of a European auto analyst trying (and failing) to follow global construction markets and Brazilian developments," Warburton wrote. "But Fiat beat numbers massively, largely due to a massive improvement in operating results of CNH, the Powertrain business and a better-than-expected auto result, driven by Brazil and LCVs," or light commercial vehicles. Fiat sells under the Fiat, Lancia and Alfa Romeo brands.