Q2 2009 Auto Sales: Fiat Reports Second Consecutive Loss on Truck

Fiat SpA, the Italian carmaker that acquired a stake in Chrysler LLC, reported a second consecutive quarterly loss as slumping truck and equipment sales offset an improvement in auto deliveries in western Europe.

The net loss of 168 million euros ($239 million) in the second quarter missed the average estimate of a 158.4 million- euro loss from five analysts surveyed by Bloomberg. Turin-based Fiat had net income of 604 million euros a year earlier.

Fiat, led by Chief Executive Officer Sergio Marchionne, gets about two-thirds of its operating income from the Iveco trucks and CNH agricultural and construction equipment units, where sales declined because of the global recession. Truck deliveries plunged 43 percent and sales of agricultural and construction equipment fell 21 percent at CNH, Fiat said.

“The truck business is facing a collapse in sales,” said Eric-Alain Michelis, an analyst at Societe Generale SA, in a Bloomberg television interview. “CNH is also having a tough time.”

Fiat predicted that the market for trucks and construction equipment will suffer for the rest of the year, with some chance of a recovery in the fourth quarter.

Fiat’s revenue fell 23 percent to 13.2 billion euros, the manufacturer said today in a statement. That missed the 13.96 billion-euro average estimate of 12 analysts.

Chrysler Integration

The carmaker didn’t address progress on integrating Chrysler in its earnings statement, though it reiterated in an analysts’ presentation that the company won’t make a cash investment. CEO Marchionne acquired 20 percent of the maker of the Dodge Challenger and Jeep models last month as it emerged from bankruptcy.

Fiat said it increased market share for autos, especially in Germany, with models including the Grande Punto and Panda hatchbacks. Government-funded incentives for consumers to buy new cars have boosted sales or slowed declines, and have particularly benefited companies such as Fiat that have deep lineups of small cars.

Fiat fell as much as 28.5 cents, or 3.6 percent, to 7.66 euros and was down 2.9 percent as of 3:32 p.m. in Milan trading, giving the company a market value of 9.2 billion euros.

Marchionne, long an advocate of industry consolidation, says a carmaker needs to produce at least 6 million vehicles annually to make money. The Chrysler deal brings production up to 4.5 million a year.

No Opel for Fiat

Fiat lost out on its bid to buy General Motors Co.’s Opel division after it declined to sweeten its offer. GM received three final bids July 20, including from Germany’s preferred candidate, Canadian auto-parts maker Magna International Inc.

“The long-term strategic issue regarding the lack of scale in the car market will continue to weigh on the stock,” said David Arnold, an auto analyst with Credit Suisse in London, who reiterated his advice to sell the shares.

Italy’s largest manufacturer, whose biggest investor is the Agnelli family, confirmed its full-year targets, saying trading profit, measured by earnings before interest, tax, and one-time items, will reach more than 1 billion euros this year.

The maker of Alfa Romeo and Lancia cars reported second- quarter trading profit of 310 million euros, compared with 1.31 billion euros a year earlier.

Revenue at Fiat Auto, which includes luxury brands Ferrari and Maserati, fell 12 percent to 7.4 billion euros, while trading profit fell 36 percent to 227 million euros.

Sales at CNH fell 21 percent to 2.9 billion euros and trading profit declined by more than half to 123 million euros. Sales of trucks and commercial vehicles at its Iveco unit dropped to 1.8 billion euros, while trading profit slumped to 18 million euros from 248 million euros.

Fiat said its net debt declined to 5.7 billion euros from 6.6 billion euros at the end of the first quarter. That compared with a 5.99 billion-euro average estimate by three analysts compiled by Bloomberg. Fiat reported a loss of 410 million euros in the first three months of this year.