Fiat: Auto Unit Loses a Third of Capital

MILAN October 23, 2002; Reuters reported that Italian industrial group Fiat confirmed Tuesday its spluttering auto unit had made a loss of at least one third of its capital but said it would not break out figures until a Fiat board meeting on Oct. 31.

Under Italian corporate law, a company which makes a loss equivalent to a third or more of its capital must carry out a recapitalisation, which Fiat Auto has already had to do once this year.

In April, Fiat Auto Holdings B.V. -- 20 percent owned by U.S. giant General Motors Corp. and 80 percent by Fiat -- pumped Fiat Auto's capital up to 1.8 billion euros.

By the end of the first half, the struggling car arm had already lost more than a third of that, posting an operating loss of 823 million euros.

Earlier Tuesday, financial daily MF said the losses had widened to 1.1 billion euros in the first nine month period.

Slumping car sales dragged Fiat, once the symbol of Italian industry to a first-half operating loss of 426 million euros and has forced thousands of job cuts at the country's biggest private sector employer.

Fiat group has said it expected its car division to break even in 2003 and turn a profit in 2004, when it has an option to sell its remaining 80 percent stake to GM.

Monday, Fiat Chairman Paolo Fresco told the Financial Times Fiat and GM were ready to "do their part" if they had to recapitalise Fiat Auto.

In Tuesday's statement, Fiat said Fiat Auto Holding BV had studied the company's books on October 2. A Fiat spokesman said the holding would probably have seen figures to August 31 as it was unlikely September's results would have been ready by then.