Fiat-Chrysler Profit Targets Beat Forecasts as U.S. Market Stages Recovery

Fiat-Chrysler shares rallied after the automaker announced lower 2012 profit targets that were still better than expected.

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The company cut its trading profit forecast to between 3.8 billion euros and 4.5 billion euros for 2012, higher than the 3.18 billion euros analysts had predicted.

The automaker uses the term “trading profit” to refer to operating profit, minus restructuring costs, gains from investments, and other income.

Fiat-Chrysler also gave guidance for net profit of 1.2 billion euros to 1.5 billion euros for 2012, beating a market consensus of 1.03 billion.

The automaker cut its 2012 revenue target from 85 billion euros down to 77 billion euros to reflect slowing demand for cars as austerity measures hit the European economy.

“Recent events in the last 12 months, and more particularly in the last semester of 2011, have cast doubt on the volume assumptions governing the overall market and our own development plans for Europe until 2014,” the automaker said.

Still, the automaker gave “net profit guidance some 30 percent above consensus,” a Milan fund manager said. Net profit for 2011 was 684 million euros, compared to just 342 million euros the year before. The 2011 figure include Chrysler results for the past two quarters.

Fiat-Chrysler reported a trading profit of 765 million euros for the fourth quarter, with U.S. operations at Chrysler contributing 639 million euros.

Fiat took over management of Chrysler in 2009, and now has a 58.5 percent stake in the automaker. Chrysler’s recent return to profit has help offset weakness at Fiat Group Automobiles, which includes the Fiat, Lancia, and Alfa Romeo brands.

FGA reported a trading loss of 15 million in the fourth quarter, a reflection of smaller sales volumes as the passenger car market shrank 3.4 percent in Europe and 9.6 percent in Italy.

Conversely, Chrysler said it swung to a full-year net income of $183 million and predicted that profit would be eight times higher in 2012 as U.S. sales continue to improve.

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To contact the reporter on this story: Emily Knapp at staff.writers@wallstcheatsheet.com

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