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Fiat surprises with profit leap

Italian auto giant Fiat reported a huge increase in second-quarter profit on Tuesday but its share price plunged after US partner Chrysler revised down its 2013 financial targets.

Fiat surprises with profit leap
Fiat's turnover has grown by 4 percent in 12 months. Photo: Rosie Scammell/The Local

 Fiat said its net earnings came in at €435 million – 82 percent more than in the same quarter last year.

This was more than had been expected by analysts polled by Dow Jones Newswires who had forecast a result of €305 million.

Without counting the Chrysler accounts, however, Fiat clocked a net loss of €247 million – about the same as in the second quarter of 2012.

Fiat also said its turnover had grown by 4 percent to €22.3 billion over the 12-month period, while debt had gone down to €6.7 billion.

The group confirmed its targets for 2013.

It forecast a net profit this year of between €1.2 billion and 1.5 billion and a turnover of between €88 billion and €92 billion.

On the Milan stock exchange, trading in Fiat shares was suspended after they plunged 4.76 percent, while the benchmark index was up 0.55 percent.

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ECONOMY

Fiat promises no job cuts in return for state aid: report

Fiat Chrysler has agreed to the conditions laid down for a state-backed €6.3 billion euro loan, including a promise not to relocate or cut jobs, Italy's Sole 24 Ore daily said Sunday.

Fiat promises no job cuts in return for state aid: report
Robots manufactured by Comau are pictured on the assembly line of the Fiat 500 BEV Battery Electric Vehicle. Photo: AFP

The state auditor has approved the guarantee, but it still needs to be signed off on by the economy ministry, the paper said.

The request for state support on such a large loan has proved controversial, particularly with the company's corporate headquarters in Amsterdam.

FCA — which directly employs close to 55,000 people in Italy — has said the loan is essential to help the group's Italy operations and the whole industry to weather the crisis triggered by the coronavirus pandemic.

The company will commit to investing 5.2 billion euro in Italy on new and existing projects, and up to 1.2 billion euro on its 1,400 or so foreign suppliers, said Sole 24 Ore, Italy's financial newspaper.

 

FCA will also pledge not to cut any jobs before 2023.

The loan will be funded by Italy's largest commercial bank Intesa San Paolo and 80 percent guaranteed by export credit agency SACE, the daily said.

The government has said FCA would face sanctions if it failed to stick to the conditions laid down for loan. Sole 24 Ore said the fine for breaking the agreement could be in the region of 500 million euros.

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