Wednesday July 22, 05:43 PM
Fiat boss 'confident' in Chrysler's recovery
MILAN (AFP) - Fiat (Milan: F.MI - news) boss Sergio Marchionne said Wednesday he was "very confident" that stricken US automaker Chrysler (Xetra: 710000 - news) , acquired by the Italian auto giant in June, would return to profitability.
Fiat meanwhile reported that it had suffered a second quarter net loss of 179 million euros (254 million dollars) compared with a profit of 646 million euros a year earlier.
The loss eclipsed the 110 million euros expected by Dow Jones Newswires in a consensus forecast.
But Fiat said it still expected to achieve a trading profit of more than one one billion euros over the year and a net profit greater than 100 million, the company said.
Marchionne in a later conference call with journalists focused on prospects for Chrysler.
"I'm very confident that the measures we are putting in place will put Chrysler out of the crisis," Marchionne said.
"We'll begin to see the impact of the technology transfer in the last part of 2010," he added, referring to the expertise Fiat has begun providing Chrysler under the acquisition deal.
The technology will allow the Detroit (DETROIT.SN - news) automaker to meet upcoming emissions and fuel economy standards and expand its product offerings.
"I've no doubt that Chrysler will be profitable," Marchionne said, cautioning however: "It is too early to talk about profit margins for Chrysler."
The Italian-Canadian chief executive credited with turning Fiat back from the brink of bankruptcy in 2004 said Chrysler "does need to go public at some point."
Fiat acquired a 20 percent stake in Chrysler in exchange for sharing its technology.
The stake will rise to 35 percent and eventually to a majority stake as long as targets mandated by the deal are achieved and US taxpayer funds provided Chrysler are repaid.
The deal gives the Italian automaker access to the lucrative US market and brings it closer to economies of scale, which Marchionne has said are necessary to compete in the global automotive industry.
But this year, hard hit by the global financial crisis like the rest of the auto sector, Fiat went into the red in the first quarter, recording a loss of 411 million euros (584 million dollars) in what it called an "extremely difficult trading environment."
It was the first loss since the group returned to profitability in early 2005 after four years of red ink.
The loss continued in the second quarter when trading profit, Fiat's key profitability indicator, fell 72.5 percent to 310 million euros, while sales fell 22.5 percent to 13.18 billion euros.
"Aggressive cost containment measures and rigorous management of the group?s operating leverage limited the impact of the significant drop in demand," the company said, adding that the group still expected to finish the year in positive territory.
Fiat's share price shed 1.7 percent Wednesday to 7.805 euros in the biggest drop on the Milan stock market.
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