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Fiat profits plunge after US tax charges

Italian car maker Fiat, which is merging with US group Chrysler, said net profit more than halved in the second quarter, undermined by a higher tax charge in the United States.

Fiat profits plunge after US tax charges
Despite the profits plunge, Fiat held to its forecasts for the year. Photo: Geoff Robins/AFP

Net profit in the first three months of 2014 was €197 million, down 54.7 percent from the equivalent figure last year. Operating profit fell by 10.4 percent to €961 million, even though sales rose by 5.0 percent to €23.3 billion.

The news sents Fiat shares down 1.51 percent in Milan, while the broader index was largely flat. The group said it had reduced net debt by €300 million in the quarter to €9.7 billion. 

But despite the profits plunge, Fiat held to its forecasts for the year. It is targeting net profit of €600-800 million and sales of €93 billion.

It expects operating profit to turn out at €3.6-4.0 billion, and debt to be €9.8-10.3 billion.

Fiat, which took full control of Chrysler in January, has called a shareholders' meeting for Friday to approve a full merger of the two groups. The new entity would be called Fiat Chrysler Automobiles (FCA).

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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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