By Jane Barrett
MILAN, July 31 (Reuters) - Everyone will be on the look-out for any glimmer of hope at Fiat's troubled car unit when the Italian industrial group reports what analysts say should be narrower second-quarter losses later on Thursday.
Fiat watchers are also keen to hear the results of a 1.8-billion-euro capital increase that closed on Wednesday and is a key part of Fiat's latest restructuring plan, aimed at pulling the group back to operating profit in 2005.
Italian newspapers reported on Thursday that the capital hike had been about 95 percent subscribed.
A slump in car sales and heavy diversification costs smashed Fiat into the worst crisis of its 104-year history last year but analysts said a plan to revive its core auto unit, unveiled last May, could show its first fruits in Thursday's results.
"People are hoping the results could be better than expected, especially in terms of profit margins at the auto unit, which may have gained as a result of cost cuts," said Gareth Williams, an analyst at Actinvest.
Fiat Chief Executive Giuseppe Morchio has said the second quarter should show signs of hope with both the group and Fiat Auto narrowing their operating losses from April-June 2002.
A Reuters poll of analysts last week forecast Fiat Auto would lose 253 million euros in the second quarter, better than a year-ago loss of 394 million euros. Revenues were seen at 5.3 billion euros, down from 5.8 billion in 2002's second quarter.
For the whole tractor-to-newspaper group, turnover was expected to come in at 13.074 billion euros against 14.608 billion in the second quarter of 2002. Operating losses were seen at 74.5 million euros against 127 million a year ago.
Top Fiat managers are due to brief analysts on the results in a conference call at 1400 GMT.
Fiat, which makes about 40 percent of its turnover from auto sales, is trying to turn around in a tough spot, with demand for new cars in its core Western European market falling 2.6 percent in the first half of 2003.
Fiat was bottom of Europe's class with sales down 13 percent -- partly due to last May's decision to cut less profitable sales to rental companies and dealers -- but hopes new cars due out in the second half will improve its top-line performance.
Analysts have said they want Fiat to give near-term targets for profit and cash flow because the first measurable goals Morchio has given since he took over as CEO in March are for full-year 2004 when Fiat should break even at operating level.
Morchio presented Fiat's third restructuring plan in a year in June, forecasting a return to net profit and positive cash flow -- one of Fiat's perennial problems -- in 2006.