Thursday April 23, 03:14 PM
Italy's Fiat posts losses
MILAN (AFP) - Italian industry giant Fiat Group reported a first quarter loss of 411 million euros (537 million dollars) on Thursday and ruled out any direct investment as part of a mooted deal with US peer Chrysler.
The group also said in an earnings statement that it had faced "difficult market conditions" and "demand volatility" in the auto market but expected "an improvement in the remainder of the year, as trading conditions stabilise."
Milan-based analysts told Dow Jones Newswires that the results were bad but better than expected. Fiat Group shares on the Milan stock exchange rose 1.00 percent to 7.55 euros in afternoon trading after the announcement.
The results came as an April 30 deadline set by the US administration for Chrysler and Fiat (Milan: F.MI - news) to strike a deal loomed and as German magazine Der Spiegel's online edition reported Fiat could take a majority stake in Opel.
A Fiat spokesman in Milan declined to comment on Der Spiegel's report, while Opel spokespeople were not immediately available for comment.
Der Spiegel said a deal could be signed as early as Tuesday but that Opel staff were opposed because they feared the takeover could lead to job cuts.
US auto giant General Motors (NYSE: GM - news) , which is facing potential bankruptcy in the United States and is running short of cash in Europe, owns a controlling stake in Germany's Opel and has said it is willing to cede its share.
Regarding the Chrysler deal, Fiat said it would make no cash investment and the deal would be an exchange of Fiat assets in return for Chrysler equity.
"The alliance does not contemplate Fiat making a cash investment in Chrysler or committing to funding Chrysler in the future," it said.
"Final terms for this transaction continue to be negotiated with the US Treasury and other relevant stakeholders," it added.
"If negotiations are concluded successfully, final terms will be set on or before April 30, 2009."
In Thursday's earnings report, Fiat Group Automobiles reported an operating loss of 30 million euros and a 17.6-percent production decline on a 12-month comparison but said that "demand trends improved during the first quarter."
The company said its car market share went up in France, Germany and Italy, and car scrapping incentives in France and Germany helped boost sales, with deliveries rising by 4.4 percent in France and 192.8 percent in Germany.
Fiat Group still lowered its net profit forecast for 2009 as a whole from 300 to 100 million euros and predicted a 20-percent slump in demand but said its trading profit would remain unchanged at more than one billion euros.
Fiat has been in intensive talks with ailing US car manufacturer Chrysler over a possible alliance seen as critical to the survival of the US company.
The US administration has given Chrysler until April 30 to sign a deal or have its bailout money cut off, which could lead to the company's collapse.
The chief executive of Fiat, Sergio Marchionne, warned earlier this month that stalled negotiations with Chrysler unions on salary reductions meant there was only a 50-percent chance that a Fiat-Chrylser accord could be reached.
He later modified his comments, saying there was no reason that a deal could not be struck by the end of the month. The New York Times reported last week that Fiat was close to a deal on Chrysler with the United Auto Workers union.
Fiat and Chrysler signed a preliminary agreement in January.
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