Skip navigation
Newswire

UPDATE 1-Fiat claws to op profit but Auto loss widens

(Adds comment on Fiat Auto, group targets)

BALOCCO, Italy, July 26 (Reuters) - Italy's Fiat clawed its way to an operating profit in the second quarter and confirmed its 2004 targets, but its core carmaker posted a worse than expected loss due to still sluggish sales and a strike.

In a statement on Monday, Fiat said it made a group operating profit of 18 million euros ($21.88 million), slightly higher than the 12 million euros median forecast in a Reuters poll of 11 analysts last week and a loss of 25 million a year ago.

But Fiat Auto, which dragged the 105-year-old company into its worst crisis in 2002, continued to struggle and posted a loss of 282 million euros, worse than the 180 million expected by analysts. It lost 234 million euros in the year-ago period.

Fiat said the wider loss was due to a policy of cutting dealer inventories, higher research and development costs and a three-week strike at the southern Italian Melfi plant, which lost Fiat 40,000 cars.

"(The loss) reflects the impact of lower sales in Italy and the rest of Western Europe...which could not be fully offset by higher margins on new models and sales increases elsewhere in the world," Fiat said.

However, Fiat said it was still confident it would break even at operating level in 2004, as forecast in a recovery plan drawn up last year. La Repubblica newspaper had reported last week that the target would be pushed back.

Fiat Auto's revenues grew just 2.6 percent year-on-year in April-June despite a raft of new models that have been launched to win back buyers and reverse a sales slump. In unit terms, sales were up just 2 percent.

Fiat's shares were little changed after the results and at 1017 GMT were up 0.9 percent at 6.38 euros.