As Fiat's amazing turnaround continues to gather pace, the giant UBS bank has issued a briefing which says that Fiat Auto "could be Europe's most profitable" carmaker in the first quarter of this year, although adding that it will be in part "given the weak competition." Either way it is looked at the statement could not possibly be imagined a year ago and is a real vindication of the path back to profitability that has been chosen by Group and Auto Division CEO Sergio Marchionne.

The Fiat Group will report full year earnings on 30th January (next Monday) and with Marchionne making very optimistic noises a strong performance is widely expected by financial analysts. "It should be aligned to expectations, or possible be even better", he told reporters during the North American International Auto Show in Detroit earlier this month. UBS further added in the briefing yesterday that they regarded Fiat's losses in the Auto Division during the first three quarter periods of 2005 as being "surprisingly modest given state of sales."

In line with most other analysts' forecasts, UBS regards the new 'compact' Fiat Grande Punto model as being the key product in the making of a profit in the short-term for the century-old Italian carmaker. Launched last September the Grande Punto has now been rolled out across most of the major European car markets and officially arrives in the UK within days. Marchionne recently revealed that its order book has climbed above the 100,000 mark. UBS assumes that the Grande Punto has a gross profit margin of 3,000 euros per unit and says that "Fiat only needs to build an additional 20,000 units in 1Q than we've assumed to make another 60 million euros."
 

At the end of last week two of Fiat's banking shareholders Sanpaolo IMI and Banca Monte dei Paschi di Siena caught the markets by surprise when they announced that they were selling their stakes. Sanpolo held 39 million shares (around 3.55 pct of the capital)  while BMPS had close to 29 million shares (2.5 pct of the capital). After falling from recent highs following this news, Fiat shares came under some pressure earlier today as traders further digested this news, but in a strong showing, Fiat Group shares finished at 7.81 euros on the Milan bourse this afternoon, just 0.14 pct down on Friday's close.

UBS - which continues to rate Fiat Group shares as being neutral - expects Fiat Auto to make a Q1 profit in the region of 100 million euros, finally reversing a long streak of quarterly losses. Meanwhile JC & Associates believe that the market has factored in any 'surprise' in Q4 figures into the current share price, and while focusing on the Grande Punto the broker also points to Fiat's recent strategy of pushing into emerging markets.