TURIN, Italy - Fiat's revival plan took root in the fourth quarter, helping the industrial group to operating profit, but a wider-than-expected net loss and still weak margins at its car arm sent its shares lower.
Fiat posted a fourth-quarter operating profit of 142 million euros ($176.6 million) on Friday, up from three million euros a year earlier and above analysts' forecasts of 120 million.
But the tractor-to-robotics group reported a net loss of 1.11 billion euros, worse than the gloomiest forecast in a Reuters poll of 11 analysts for a net loss of 777 million euros. It reported a net loss of 2.97 billion euros in the year-ago quarter.
Fiat Auto, which makes up 42 percent of the group's sales, made an operating loss of 97 million euros in October-December, at the bottom end of expectations.
"The results were a little disappointing," said Nicolo Foscari, a fund manager at Credit Suisse Asset Management in Milan. "Margins on the auto side are lower than expected, and Fiat's other activities only partly compensate for this."
Fiat shares, which rose as much as 3 percent before the results announcement, fell on the figures.
"There is some improvement compared with last year," said one Milan-based analyst. "But the figures show there is still a long and rocky road ahead for Fiat."
In a statement, Fiat said it closed 2003 with a net loss of 1.9 billion euros, recovering from a record loss of 4.3 billion euros in 2002, when a slump in car sales and high debt forced Italy's biggest industrial group to sell assets and restructure.
Analysts had forecast a net loss of 1.2 billion euros.
Fiat said a more rapid improvement in its performance in the fourth quarter meant it was in a good position to hit its target of breaking even at operating level this year while losses at Fiat Auto would narrow throughout 2004 to break even in 2005.
Fiat also confirmed that the whole group should break even at net level in 2005.
"Until there is a profit, I will not be happy," Chairman Umberto Agnelli told a news conference. "The last quarter of the year already shows substantial improvements and we begin 2004 in better conditions," he added.
The fourth quarter was the first full sales period to benefit from the new Fiat Panda and Lancia Ypsilon, and turnover at Fiat Auto came in at 5.71 billion euros, flat on the previous year, when sales had been boosted by government incentives.
But the car unit, 10-percent owned by General Motors, is still deep in the red with a full-year operating loss of 979 million euros. At group level the 2003 operating loss shrank to 510 million euros from 762 million in 2002.
Group turnover fell to 12.66 billion euros in the fourth quarter from 14.91 billion the year before, when Fiat still owned insurer Toro and Fiat Avio, which it sold last year to help fund a turnaround of its core car business.
Net debt was 3.0 billion euros at the end of December with gross debt of 22.5 billion euros -- of which about 12 billion euros was industrial debt and 10 billion financial debt.
"The debt figure came in at the higher end of the forecast range," Foscari said. "In the near term we could see the stock give back some of its recent gains."