October 27, 2011 / 5:00 PM / in 7 years

Chrysler drives Fiat profit higher

MILAN (Reuters) - Fiat-Chrysler’s third-quarter trading profit was well above forecasts at 851 million euros, with U.S. automaker Chrysler contributing as much as two-thirds of it and helping offset weak European sales.

Visitors look at the new Fiat 500 at the LA Auto Show in Los Angeles November 17, 2010. REUTERS/Mario Anzuoni

However, the combined group’s net debt rose sharply to 5.8 billion euros ($8.2 billion), compared with an analyst consensus forecast distributed by Fiat of 4.1 billion euros.

Fiat said in a statement that it was firming up its trading profit target for the full year to more than 2.1 billion euros from around 2.1 billion euros previously. All other targets for the year were confirmed, including revenues in excess of 58 billion euros and net debt of between 5 and 5.5 billion euros.

Fiat said the rise in the third-quarter debt was due to seasonal capital expenditure and payments it made to the U.S. Treasury and Canada for their stakes in Chrysler earlier this year.

The Italian carmaker took over management of Chrysler under a 2009 bailout deal with the U.S. government, and now has a 53.5 percent stake in the No. 3 U.S. automaker — set to rise to 58.5 percent by year-end.

Chrysler, which had earlier reported a 24 percent jump in global vehicle sales, contributed 556 million euros to the group’s trading profit, which at 851 million euros easily beat analysts’ forecasts of 705 million.

By contrast, the trading profit at Fiat Group Automobiles, excluding the luxury Ferrari and Maserati brands, fell to 128 million euros in the three months to September, compared with 187 million in the second quarter.

Besides seasonal factors, the figures reflect a lack of new models and declining sales for Fiat in Europe, where it recorded a 12 percent fall in the first nine months of the year, compared with a 7.9 percent rise for Volkswagen AG.

It is also seeing its market share decline in Italy, where sales are at their lowest in 30 years and all of its five car factories lose money.

Highlighting growing strains in Europe, Daimler and Volkswagen gave downbeat forecasts for demand in the region, which is grappling with a sovereign debt crisis. ($1 = 0.719 Euros)

Editing by Will Waterman

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