Fiat’s first financial report to include its now majority owned Chrysler subsidiary pleased investors at first, but they weren’t so happy when a deeper look into the numbers revealed alarming and rising debt levels.
Fiat said its net debt will rise to between €5 and €5.5 billion by the end of 2011, up from the current €3.4 billion.
“(this) has spooked the market and is a reflection of Fiat’s upcoming investment needs in the coming quarters which will likely drive sequential cash absorption in most core businesses,” said Deutsche Bank analyst Jochen Gehrke.
Fiat-Chrysler raised second quarter trading profit to €525 million in the second quarter from €307 million in the same period last year. Trading profit is forecast to rise to about €2.1 billion for 2011, up from the previous target of €1.2 billion, which didn’t include Chrysler.
Bernstein Research analyst Max Warburton said Fiat will be looking to Chrysler as the biggest creator of profits.
“We see little reason why Fiat Auto can grow profitability from here. Chrysler may have greater possibilities although still sluggish U.S. market and limited new product makes that tricky at present.
Neil Winton – August 1, 2011
No comments yet.