Fiat to report another loss on falling car sales, analysts say

July 29, 2002 TURIN -- Bloomberg News reported that Fiat SpA, Italy's largest industrial company, will report its third consecutive quarterly loss on Monday after car sales plummeted, analysts said.

The loss before interest and taxes will be 174 million euros ($174 million), according to the average forecast of five analysts surveyed by Bloomberg News. It had an operating profit of 403 million euros in the year-earlier period.

Fiat's six-month Western European car sales fell 21 percent, more than any other automaker as PSA Peugeot Citroen and others won sales in Italy. Fiat shares fell to a 10-year low on Wednesday.

"Fiat Auto is a salvage job," said Xavier Gunner, a UBS Warburg analyst. "They're trying to keep it alive" until it's sold to General Motors Corp.

Fiat has an option to force General Motors to buy the 80 percent of Fiat Auto it doesn't already own from 2004. Fiat has said repeatedly it plans to fix Fiat Auto by reducing costs and increasing sales rather than sell it.

The auto unit's operating loss was 365 million euros, analysts said, compared with a profit before interest and tax of 19 million euros in the year-earlier quarter.

The carmaking business -- which includes Alfa Romeo, Lancia and Fiat brands -- has lost money in seven of the last eight years. Gunner said the auto unit 2002 operating loss will be more than 900 million euros, or almost double Fiat's forecast loss of 550 million euros. The first-quarter loss was 429 million euros.

Fiat said this month it would reduce output by 90,000 cars and lay off 21,700 auto workers, nearly half its European carmaking workforce, in August and September to reduce costs.

On July 15, Fiat cut its forecast for Stilo compact car sales for the second time in two months. It expects to sell 280,000 Stilos next year compared with the 350,000 originally planned.

Fiat's West European market share fell 2.2 percentage points to 7.2 percent in June, below its 10 percent target.

Profit at the Iveco commercial trucks and FiatAvio aviation unit rose, while the loss at the Magneti Marelli auto parts unit widened, analysts said.

CNH Global, the farm-equipment maker 80 percent owned by Fiat, said on Wednesday that second-quarter net income rose more than six-fold to $39 million.