Fiat is forecast to have returned to profit in the second quarter as car sales benefited from tax breaks, but analysts looking said trucks and tractors were still troubled.
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Chief executive Sergio Marchionne has said this year will be the toughest he has faced but is still predicting a trading profit of more than EUR1bn (US$1.4bn) and debt being cut below EUR5bn, according to Reuters.
Cheuvreux analysts expect Fiat to be the only mass-market carmaker in profit in the first half of 2009.
For the second quarter, the average forecast was for a trading profit of EUR245m, down from EUR1.13bn a year ago. Fiat made a first-quarter trading loss of EUR48m.
Analysts were hoping Marchionne might give some indication on plans for Chrysler, which will likely include cutting models, Reuters noted, adding he was unlikely to oblige, as the two companies are still run separately.
“Fiat should have benefited most from market strength in Brazil and the pull of incentives,” analysts at UBS said in a research note.
“One would guess they were pretty happy with the destocking they did in Q1 at Fiat Auto,” Michael Tyndall, industry specialist at Nomura International, said.
Fiat was expected to have generated around EUR400-500m of cash in the second quarter as those increased sales help it cut inventories, and that could allow it to bring debt down under EUR6bn.
“The funding situation is an ongoing concern, particularly as the benefits they’ve seen in Q2 from the incentives are not sustainable,” Tyndall said.
UBS analysts noted “renewed debt concerns” affecting Fiat bonds.
“Total European (truck) sales will be down below the 1993 recession trough, achieving in a single year the full downturn seen in 1990-93,” Bank of America/Merrill Lynch analysts said.
