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Fiat drives profits ahead.

Fiat reported a faster than expected bounce back to profit in its auto division at the end of 1999 and forecast the group would see "significant improvement" in operating profit in 2000.

Amid persistent market speculation that Fiat, the world's seventh largest car-maker, could soon merge to keep up with industry consolidation, the company reiterated it would study all options including alliances that could strengthen it.

A deal with DaimlerChrysler appears the front-runner.

Fiat, which has interests in the Midlands, said its car-making division, which brings in about half its revenues, made an operating profit of pounds 121.6 million in the fourth quarter, against a pounds 79 million loss in the last quarter of 1998.

That cut full-year operating losses for Fiat Auto to pounds 74.6 million versus pounds 66 million in 1998.

Analysts had expected full-year losses in the vehicle business of an average pounds 105 million. Before last quarter, Fiat Auto piled up five quarters of losses in a row due to price wars in Europe and a slump in Brazil, its top foreign market. But a revamp of its popular Punto hatchback boosted sales at the end of last year. That helped Fiat turn in an unexpectedly higher operating profit for the year as a whole - pounds 486 million compared with pounds 460 million in 1998.

But net turnover slid over 40 per cent to pounds 218 million from pounds 383 million, as the company swung into debt to pay for acquisitions including US farm equipment maker Case.

Fiat said in its results statement that it expected to see "significant improvement in operating profitability" in 2000. But it warned that its pre-tax income, while "substantially higher" than pounds 617 million posted for 1999, would be hit by increased financial expenses.

Fiat's extensive interests in the UK include four car parts plants in the Midlands, three of them joint ventures through Fiat-owned Magneti Marelli with Denso, the Japanese company.

The two make car radiators and air conditioning units at two factories in Telford and starter motors and alternators at a plant at Shaftmoor Lane in Birmingham. It also has a joint venture with Bosch making car lights at Cannock.

Fiat has a joint venture interest in Alstoms' Metro Cammell train manufacturing plant at Washwood Heath in Birmingham.
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Publication:The Birmingham Post (England)
Geographic Code:4EUIT
Date:Feb 19, 2000
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