Fiat shifts profit talk down a gear

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Italian automaker Fiat has cut its 2014 profit guidance just after taking full control of US unit Chrysler, as a cooling of its large Latin American market eroded earnings.

Fiat yesterday reported fourth-quarter results below analyst expectations, triggering a 4 per cent fall in its shares.

The company also said it would not pay a dividend on 2013 earnings to preserve cash after completing its acquisition of Chrysler to create the world’s seventh-largest carmaker.

“The results were disappointing and fell short of expectations. Fiat is a restructuring story.

“It needs time,” said Gabriele Roghi, head of investment at Invest Banca.

Latin America and Chrysler have become increasingly important to Fiat as its business in Europe struggles with a six-year slump in auto sales.

But its operations in Brazil, which make up about one fifth of Fiat’s core earnings, have been hit by an end to car sales incentives and currency effects.

“One major factor was obviously Latin America, that came in clearly below (expectations),” said Sascha Gommel, an analyst at Commerzbank.

Fiat reported a fourth-quarter group trading profit of 931 million euros, compared with a restated 887 million the previous year and analysts’ consensus forecast of 1.15 billion euros.

The automaker now expects a 2014 trading profit of between 3.6-4.0 billion euros, down from a range of 4.7-5.2 billion euros given in October 2012 and below an analyst forecast of 4.15 billion euros.