Fiat has reported an operating loss of €127m (about $US125 million) for the second quarter as a €394m loss at Fiat Auto wiped out profits at its truck, Ferrari and CNH farm equipment units, the Financial Times (FT) said.

The newspaper said Fiat’s reported pre-tax profit of €28m, compared with a profit of €317m a year ago, was due to a one-time gain of €671m from the sale of one third of Ferrari to a group of investment banks.

After taxes, Fiat had a net loss of €34m, compared with a profit of €190m a year ago, the FT added.

The Financial Times said that Fiat Auto’s loss was in line with expectations, almost matching the €429m loss for the first-quarter.

But the newspaper noted that the first-quarter loss included a one-time charge of €150m to cover potential losses from a lengthening of the period for guarantees and that Fiat Auto made an operating profit of €19m in the second quarter of 2001.

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The FT said that weak car sales in Europe and Latin America reduced Fiat Auto’s second quarter revenues by 15% to €5.78bn with the division struggling to sell its fully redesigned compact Stilo model (which replaced the Bravo/Brava hatchback line).

The newspaper said that Fiat Auto initially attempted to load the model with expensive equipment which priced out traditional customers yet the company is only now beginning to offer cheaper variants.

Fiat Auto’s Italian assembly plants closed over the weekend for a regularly scheduled three-week holiday break, the Financial Times said, but up to 21,700 workers will be temporarily laid off in the weeks after plants re-open, reducing output by 40,000 vehicles.

The Financial Times said that Fiat truck division Iveco reported a second quarter operating profit of €25m, down from €86m a year earlier, as a result of a weak European market although revenues rose 5% to €2.41bn.