Fiat Auto has posted its first quarterly trading profit (EUR21m) in black ink after 17 successive quarters of losses.

Its full-year trading loss of EUR281m was EUR541m lower than in 2004.

All other parts of the Fiat group showed an improvement in trading profit of EUR409m year on year to EUR1,281m.

The EUR950m improvement in trading profit for 2005 reflected a EUR 541m reduction in trading losses at Fiat Auto combined with positive results in all other group sectors.

The entire Fiat group reported full-year net income of EUR1.4bn, EUR3bn better than a year ago, while net industrial debt was two-thirds less at EUR3.2bn.

Although the group boosted revenues 2% to EUR46.5bn in 2005, Fiat Auto revenues were off -0.8% as a recovery in car sales volumes in the last quarter was not enough to offset the trend of the first nine months, when sales slowed down ahead of new model launches.

The Automobiles sector recorded revenues of EUR 21.7bn in 2005, up nearly 3% on the prior year. Fiat Auto (Fiat, Alfa Romeo, Lancia and LCVs) had revenues of EUR 19.5bn, a slight decrease (-0.8%) from 2004 due to lower volumes, partially offset by a better mix and positive exchange rate impacts.

Fiat Auto reported contrasting performances in 2005. Sales in the first half of the year were impacted by intense competitive pressure, the group's focus on more profitable sales channels, and especially slower sales of older models ahead of new product launches. The launch of the Croma (May), Grande Punto and Alfa 159 (September) reversed the trend.

Volumes, which had declined by 8.4% in the first half and by 5.9% in Q3, rose by 7.6% in Q4 (+14.7% in Italy).

These launches, aided by the introduction of the Alfa Brera, Panda Cross, and Lancia Ypsilon Momo Design models in Q4 started to reverse the sales decline and, the automaker said, positioned the business for healthy volumes in 2006, with Italian market share targeted at around 30% for the year.

In Western Europe, demand remained largely unchanged from 2004 (-0.2%).

Fiat Auto delivered 1,697,000 units in 2005, 3.9% less than in 2004. 1,100,000 units were delivered in western Europe (-7.8%); the decline in Italy for the year (-2.4%) levelled off sharply in Q4. There, Fiat Auto's share of the automobile market stood at 28%, virtually unchanged from 2004, while its share of the western European market dropped by 0.7% to 6.5%.

Outside western Europe, the dismal performance of the Polish market led to a 44.3% reduction in sales there. In Brazil, Fiat Auto sales rose 12.9%, yielding market shares of 24.4% in passenger cars and 28.8% in light commercial vehicles.

The commercial vehicles market grew by 2.8% in Western Europe but contracted 1.8% in Italy. In 2005, Fiat held more than 10% of the European commercial vehicles market and over 40% in Italy, substantially unchanged from 2004 levels.

Magneti Marelli had revenues of EUR4,033m in 2005, up 6.3%.

Its trading profit of EUR162m was virtually unchanged from 2004 (EUR 165m) as efficiency gains offset higher raw materials prices.

Fiat Auto said the western European automobile market is expected to remain stable in 2006, while demand in Brazil should show moderate growth.

It plans to take advantage of the full-year contribution of its new models to boost volume and improve its mix in the European markets while profit contribution from Brazil is expected to remain roughly unchanged from 2005.

"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," the automaker said.