The Fiat Group announced its much anticipated fourth quarter and final year results this morning, with the big news being that the struggling Auto Division has posted a 21 million euro fourth quarter trading profit, in the process comfortably beating analysts predictions. It ended a terrible run of 17 consecutive quarters of negative performance from the Auto Division, as growing demand for exciting new models, driven forward by the new Fiat Grande Punto, abruptly reversed the sales slide. The figures beat a poll of analysts conducted by Reuters prior to the announcement earlier, which had forecast an expected profit of 8.5 million euros for the Auto Division. Group trading profit during the final quarter was 361 million euros, compared with a loss of 125 million euros in 2004, easily beating a Reuters poll forecast of 276 million euros.

The 21 million euro trading profit for the Auto Division in the fourth quarter is in completed contrast to a year earlier when a 156 million euro loss was recorded. The arrival on the market of the highly-acclaimed Grande Punto served to drive the division upwards, and with a recently confirmed order book already of over 100,000 units, Fiat Auto are targeting 360,000 sales for the new 'compact' category model this year. Also pushed on also by the arrival of the Fiat Croma and Alfa 159, fourth quarter revenues at the Auto Division were 5.562 billion euros, up from 5.398 billion a year-ago.

The Fiat Group as a whole had a strong year, with total revenues of 46.5 billion euros, a figure up 2 percent year-on-year. In fact every sector, apart from the Auto Division which slipped by just 0.8 pct, was up on 2004's performances. Fourth quarter Group revenues were 13.1 billion, up by 7.5 pct from 12.2 billion in Oct-Dec 2004. Group headline debt - a figure that analysts focus on - was slashed to 3.219 billion, from 9.447 billion at the end of 2004, which pleased market watchers' today.

The report reaffirmed that the Group's 2007 and 2007 financial targets remain on track, with positive operating cash flows expected, a trading profit of between € 1.6 and 1.8 billion euros, and net income of about € 700 million. "The Western European automobile market is expected to remain stable in 2006, while demand in Brazil should show moderate growth," said the statement as it looked forward to this year.
 

"In this context, the Group’s Automobile Sector plans to take advantage of the full-year contribution of its new models to boost volume and improve its mix in the European markets. Meanwhile, the profit contribution from Brazil is expected to remain roughly unchanged from the 2005 level. Aggressive cost-cutting will continue in all non-essential areas of the company. Efforts will also be made to ensure that purchasing efficiencies offset the impact of expected price hikes in raw materials," it added.

Bond issue to get the go-ahead

Fiat today announced its intention to proceed with issuing a seven year benchmark bond, denoted in euros, reports news agency AGI. The bond will be issued by Fiat Finance and Trade Ltd, a wholly owned subsidiary of Fiat SpA and will be guaranteed by Fiat SpA. The total cost of the issue will be determined based on market conditions. Fiat expects to also ask for the bond to be listed and traded through the Irish Stock Exchange. The bonds are on offer outside of the US to any 'non-US persons', in accordance with Regulations; this implies the bonds won't be registered under the 1933 "Securities Act" and subsequent amendments.

The bonds cannot be bought or sold in the US without registration or an apposite exemption to that effect. Revenue is earmarked for company running costs and refinancing Fiat Group debt. Notice of such bonds, according to a Group communiqué', is neither an act of sale nor intended as promotion. The bonds, furthermore, cannot be sold in any state or jurisdiction expressly denying rights to such operations. Fiat hence stresses that on no account and at no time has the Group solicited public interest for the operation.