Fiat doubled its 2006 profit forecast for its key automotive unit on Wednesday after strong sales helped the division post its second quarterly trading profit in a row, beating expectations, according to Reuters.

The group also announced plans to refinance existing debt, the report said.

According to the news agency, Fiat, whose sales of new models have helped it out-perform both the Italian and European market this year, reported a first-quarter trading profit of EUR323m ($US409m) compared with EUR47m a year ago, beating expectations.

The Fiat, Alfa Romeo and Lancia brands auto unit made a trading profit of EUR57m against a loss of EUR129m.

"We are beginning to see the... benefits of the work we have done," Reuters quoted Fiat chief executive Sergio Marchionne as saying during an analysts conference call, referring to the group's massive restructuring.

Including the luxury Maserati and Ferrari brands, the unit's profit totalled EUR49m against a loss of EUR166m.

Analysts had expected the unit to post a trading profit of EUR40m and the group EUR300m, according to a poll compiled by Fiat, Reuters said.

"All targets (are) confirmed, with Fiat Auto 2006 trading profit guidance raised to EUR200m (from a previous EUR100m)," Fiat reportedly said in a statement.

Reuters noted that Fiat is one of the few European automakers to beat expectations this quarter - Volkswagen and PSA Peugeot Citroen missed them despite posting higher numbers.

Although its rivals are expected to put pressure on Fiat with new models later this year, Abaxbank analyst Gabriele Parini told Reuters Fiat would keep pleasing the market because 2005 was so weak. "We will keep seeing strong figures for a while."

JP Morgan's Philippe Houchois reportedly said Fiat's operating profit margin was also better than others in the sector, standing at some 17% against BMW's 5%, for example.

Fiat group's net profit was EUR151m against a loss of EUR212m before minority interests and unusual items, Reuters added.

The report said group net revenues rose 16.7% to EUR12.6bn while, at the auto unit, they grew more than 23% to EUR6.1bn, with the main Fiat brand up 23.7% at EUR5.7bn.

Sabine Blümel, of the industry research team at Banca IMI Research told just-auto that Fiat Auto's reported Q1 trading profit of EUR57m was better than the bank's expectation of EUR50m and consensus of EUR40m.

"Unit sales jumped 15.7% year on year to 485,000 driven by new models, namely the new B segment Grande Punto, leading to a 20.6% year on year increase in Fiat sales and the full roll-out of the Alfa 159, resulting in a 12.5% year on increase in Alfa Romeo sales to 38k versus our expectation of +20.6% and -1.0%, respectively," she said.

"As expected, the key driver behind the EUR186m year on year improvement in Fiat Auto's trading performance was attributable to operational leverage, thus benefiting from the 21% year on year increase in production and higher capacity utilisation, and better unit revenues, as the new models are being sold with a higher uptake of options than predecessor models."

Blumel added that group trading profit of EUR323m was below Banca IMI Research's EUR365m estimate, though better than the consensus EUR320m.

"The year on year reduction in net financial charges contributed to a better than expected EUR232m pre-tax profit and EUR138m net income," she added.

"Marchionne raised the guidance for Fiat Auto full year 2006 outlook to EUR200m, the upper end of the current target range and better than our estimate of €180m."