Ferrari On Track To Bring In Much Needed Profit
Fiat’s prospects in Europe continue to generate investor concern, although its Ferrari subsidiary goes from strength to strength.
Fiat announced short-time working at its Panda producing Pomigliano plant in Italy in September and October. Italian politicians are pressing Fiat for details of its production plans, and this expected to be announced after third quarter results. Unions fear this might include plant closures.
In the second quarter Fiat lost €186 million in Europe compared with a loss of €170 million in the previous quarter. Fiat cut European capital spending for 2012 by €500 million.
Citi Research said Europe had been poor for Fiat, which globally managed a trading profit of €144 million in the second quarter, compared with Chrysler’s contribution of €866 million.
“With the European business challenged by current Italian conditions and structural competitive issues, with Brazil margins sharply lower year on year as volume and prices fall, we believe the Fiat investment case rests solely with Chrysler,” Citi Research said in a report.
“With Chrysler margins close to peak historical levels and the U.S. market as competitive as ever, we would not join other commentators in extrapolating Chrysler’s current profitability. With current European debt levels, we think European profitability needs to have improved before Chrysler margins start to decline,” it said.
There was good news though for Fiat from Ferrari, which said it expects 2012 to produce new sales and profit records.
In 2011, Ferrari set new records for sales with 7,195 vehicles and operating profit of €321 million.
Neil Winton – September 3, 2012
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