Moody’s Investors Service has today (3 November) changed the outlook on Fiat SpA’s corporate family rating to positive from stable.
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The ratings service said that the outlook change to positive is based on the expectation that Fiat’s consolidated industrial operations will generate a positive free cash flow in 2006, notwithstanding continued commercial and economic pressures facing the group, as well as a sizable reduction in industrial net debt.
In addition, Dow Jones Newswire reported that financial groups Goldman Sachs and Citigroup have both raised their target price for Fiat on the back of a strong third quarter at Fiat Auto, which reported a third quarter trading profit of EUR51m on 26 October, from a loss of EUR85m in the same period in 2005.
“The outlook change to positive reflects the continued improving trend of Fiat’s operating performance, with group trading profitability now restored to positive levels; Fiat Auto has been turned around into a positive trading profit since Q4 2005 and we expect further sustainable improvements at least over the near term,” said Falk Frey, vice president – senior credit officer, and the lead analyst at Moody’s for the European automotive sector.
Fiat’s ratings reflect the group’s scope and geographically well spread operations, the solid market position of Case New Holland, its potential to improve a highly indebted financial profile and Iveco’s stable market share in the European truck markets, Moody’s added.
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By GlobalDataMoody’s said it could upgrade Fiat’s ratings should there be further strengthening of the group’s overall financial profile in 2007 and beyond.
