Fiat/Chrysler’s Marchionne Sees Global Recovery in Progress
July 21, 2010
By Michelle Krebs
Fiat/Chrysler CEO Sergio Marchionne, in announcing the Italian manufacturer’s return to profitability in the second quarter, said he sees “substantial signs of economic recovery” across the globe.
All Fiat divisions were in the black, Marchionne said in a Webcast from Chrysler’s Auburn Hills, Mich., headquarters. Fiat owns 20 percent of the American car company, which occurred during Chrysler’s Chapter 11 bankruptcy.
The strength of the second quarter – Fiat’s first profitable quarter in the last three – came from higher sales of Iveco trucks and New Holland tractors, which offset lower car sales in Europe. In total, Fiat had lower vehicle sales but generated higher revenues thanks to dramatic cost cutting.
Thanks to a $145-million profit in the second quarter, the company will have full-year profits “significantly north” of the company’s target, Marchionne said.
Fiat’s second-quarter trading profit was double that of the second quarter of 2009. Second-quarter revenue rose nearly 13 percent from a year ago. Fiat’s trading profit for the year already has exceeded its full-year target, but Fiat will wait for the completion of the third quarter before officially upping its forecast, Marchionne said.
Fiat’s results were substantially higher than analysts had expected. Fiat’s surprisingly strong results resulted in a nearly 7 percent rise in Fiat’s shares in its highest stock market gain since early May.
Marchionne said the de-merger of Fiat — which will split automaking from its other businesses — will be complete by year-end. Fiat obtained financing to help separate the businesses.
Michelle Krebs is Edmunds.com senior analyst and Editor at Large.
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