Fiat says Italian plants remain secure despite tough market
Carmaker's profits boosted by profitable Chrysler subsidiary30 January, 18:24
"I confirm that we will not close plants in Italy," despite the tough market, Fiat CEO Sergio Marchionne said at the opening of a new Maserati factory at Grugliasco, near Fiat's Turin base.
In a later conference call, he elaborated on his concerns about the market outlook.
"The pressure on prices in Europe has not loosened," said Marchionne. "We do not expect an improvement in medium term".
Marchionne's comments came as the automaker announced that its fourth-quarter net profit reached 102 million euros, up from 43 million euros in the same period last year, boosted by its profitable Chrysler subsidiary. The Fiat Group closed 2012 with a net income of more than 1.4 billion euros, beating analysts' expectations. Fiat owns 58.5% of Chrysler, which earned $1.7 billion US last year. At the moment, Marchionne and Fiat are relying on profits from Chrysler to overcome losses at the Fiat's European operations.
Fiat also announced it would not pay any dividend on 2012 results to preserve cash.
Despite the financial woes, Marchionne's comments on Fiat's Italian future were echoed by Fiat Chairman John Elkann, one of the heirs of the Agnelli family that founded the company and made it into an international auto giant.
"It has been 10 years since my grandfather (former Fiat chief Giovanni Agnelli) passed away and since then our commitment to Italy and to Turin has never faltered," Elkann said.
"That is because my family and Sergio Marchionne wanted this, despite the market difficulties. "We took tough decisions to be able to continue producing in Italy".
Marchionne, who is also CEO of Chrysler, which the Italian firm took over in 2009, said he was hopeful Fiat's European business could break even by 2015 or 2016. "We are working at the speed of light to achieve this," Marchionne said. "The goals we’ve set for the year ahead reflect a common desire by everyone from leadership to the shop floor to succeed and sustain the power of the house we are building," Marchionne said in a statement. He added that he has plans to have the two automakers merged by 2015, based on improving the Fiat brand's performance in Europe.
Meanwhile in New York, Chrysler Group LLC reported its $1.7 billion US profit was sharply higher than the $183 million reported in 2011.
Turnover at the Fiat-controlled carmaker increased by 20% to $65.8 billion in 2012 compared to $55 billion the previous year.
Chrysler forecast turnover in 2013 would rise to at least $72 billion, with profits reaching $2.2 billion.
"While we are pleased to have achieved strong financial results in 2012, the enterprise we are crafting is not complete," Marchionne, who is also Chrysler Group chief executive, said in a statement.