Italian automaker Fiat SpA (FIATY.PK) said Wednesday its third quarter profit plunged from last year, hurt by lower demand for all its products amid the difficult economic conditions. Looking ahead, the company said it may write-off some of its past investments based on their future viability.
The company posted a profit of EUR 25 million or EUR 0.017 per share for the third quarter, much lower than EUR 468 million or EUR 0.356 per share in the prior year quarter. Excluding certain unusual items, net profit was EUR 66 million for the quarter.
Trading profit for the quarter plunged to EUR 308 million from EUR 802 million in the previous year quarter, due to continued severe pressure on volumes and an overall highly competitive environment in most businesses. Trading margin decreased to 2.6% from 5.6% in the year-ago quarter.
Third quarter net revenues declined 15.9% to EUR 12.05 billion from EUR 14.33 billion in the same quarter last year.
Revenues from Fiat Group Automobiles or FGA decreased slightly by 1.4% to EUR 6.5 billion over a year ago. The company noted that FGA continued to increase market share in Western Europe with its product strength in eco-friendly vehicles. In Brazil, Fiat maintained leadership with 24.5% market share.
Maserati reported EUR 93 million in revenues, down 53% over last year. Ferrari reported revenues of EUR 396 million, down 12% over a year earlier, hurt by lower sales volumes and a less favourable sales mix.
Agricultural and Construction Equipment or CNH revenues dropped 27.4% to EUR 2.3 billion, due to persisting significant declines in the global construction equipment industry and weaker market conditions for the agricultural business over last year levels.
Components and production systems' revenues were EUR 2.6 billion, down 23.5% from the third quarter of 2008.
Revenues from Trucks and Commercial Vehicles decreased 29.7% to EUR 1.7 billion, hurt by continued market weakness, which was most pronounced in the heavy segment. Total deliveries were down 35.2% to 25,880 units.
After a two-year absence, Fiat Group decided to access the debt capital markets. In July and September, Fiat Finance and Trade Ltd. SA issued two bonds under the GlobalMedium Term Note programme.
The first issue of EUR 1.25 billion, due in 2012 and paying a fixed coupon of 9%, was priced at 99.367%, with more than EUR 10 billion in demand. The second issue of EUR 1.25 billion, due in 2014 and paying a fixed coupon of 7.625%, was priced at 99.498%, with demand at EUR 8 billion.
In August, CNH also completed the issue of EUR 1 billion in senior notes, due in 2013 with a 7.75% coupon payable semi-annually, at an issue price of 97.062%.
For the nine-month period of 2009, the company reported a loss of EUR 565 million or EUR 0.450 per share, compared to profit of EUR 1.541 billion or EUR 1.158 per share in the previous year period.
Net revenues for the period dropped 21.4% to EUR 36.50 billion from EUR 46.43 billion in the prior year period.
Looking ahead for 2009, the company expects that global demand for its products will decline by 20% over last year. Group trading profit is estimated to be in excess of EUR 1 billion.
The company said it may revisit the future viability of some of its past investments, necessitating the write-off of these legacy investments. These charges, if any, will be determined after the presentation by Chrysler Group LLC of its 5-year plan on November 4. They will not have a cash impact, the company noted.
FIATY.PK is currently trading at $16.40, down 35 cents or 2.09%.
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