ITALY: Fiat confirms appointment of fifth CEO in five years
As expected, Fiat named turnaround expert Sergio Marchionne to be its fifth CEO in two years, quickly plugging a power vacuum in its upper ranks and pushing its shares to their highest level in a month.
According to a Reuters report, investor-friendly Marchionne, who was CEO of Swiss testing services firm SGS and a Fiat director, immediately pledged to stick to the turnaround plan drawn up by his predecessor, Giuseppe Morchio, who resigned unexpectedly on Sunday.
"The plan was approved by the board. We have every intention of completing it," he reportedly told a news conference, easing concerns that a new CEO would mean a new plan for the loss-making giant - Marchionne was part of the board that passed the plan.
However, Marchionne hinted that there might be more changes ahead as he evaluates the managers Morchio brought in to breathe new life into Italy's biggest industrial group, the report said.
"I don't know them well enough. We need to start working and see what happens," he told Reuters, adding: "I know the team we have has good potential, we just need to tap it. I've done this before."
The news agency said Marchionne is a hard taskmaster who sets tough targets and expects people to meet them - at SGS, he stripped down management to save cash while as chairman of chemicals firm Lonza he was instrumental in the resignation of its CEO after bad results.
Reuters said Marchionne, 51, arrived two days after Fiat's controlling Agnelli family named Ferrari chief Luca di Montezemolo as chairman to replace Umberto Agnelli, who died last week - Morchio, who had been after the top job, quit as a result.
"The good news is that a serious problem was resolved in less than 24 hours," Lorenzo Colucci, head of equities trading at Mediobanca, told Reuters.
The news agency said Fiat stock closed up 4.6% at €6.00 on Tuesday while the DJ Stoxx index of European auto stocks fell 1%.
The report said the new appointments were hailed as a sign that the Agnellis did not plan to loosen their ties to the carmaker their ancestor founded 105 years ago - instead, they named the most prominent member of the younger generation, John Elkann, as vice-chairman.
Montezemolo reportedly said Elkann, 28, would have an operative role at Fiat and not just sit on its board and strategy committees.
According to Reuters, Elkann said the new team would speed up Fiat's recovery plan, which hopes to drag the tractor-to-components group back to operating profit in 2005 and net profit in 2006.
To do that, analysts and fund managers told the news agency that Fiat needed to boost its top line as fast as possible or else sell more assets. Last year, revenues fell 7% on a like-for-like basis while its core car sales dropped 10%.
One analyst reportedly described Montezemolo and Marchionne as a "good cop, bad cop" team - Montezemolo trumpeting its new cars while Marchionne keeps to his recipe of "hard work and committment."
The new team also takes on delicate negotiations with banks whose €3 billion loan to Fiat comes due next year, Reuters noted. Montezemolo reportedly said he had "clear and direct relationships with the banks who have already said they continue to support the plan."