Bloomberg News

Fiat Industrial Raises Sales Forecast as Earnings Advance

February 02, 2012

(Updates with analyst comment in fourth paragraph.)

Feb. 1 (Bloomberg) -- Fiat Industrial SpA, the truck and tractor unit spun off from carmaker Fiat SpA last year, raised its revenue forecast after earnings climbed 34 percent in the fourth quarter on increased sales at the Iveco truck division.

Trading profit, or earnings before interest, taxes and one- time gains or costs, advanced to 395 million euros ($518 million) in the period, from 294 million euros a year earlier, the Turin-based company said today in a statement. Revenue rose almost 15 percent to 6.82 billion euros.

Fiat Industrial, which sells trucks through the Iveco unit as well as agricultural and construction equipment through CNH Global NV, raised its 2012 revenue forecast to 25 billion euros from 24 billion euros, and reiterated a target of as much as 2.1 billion euros in trading profit.

“The reiteration of guidance really is good news and unexpected after CNH results,” said Erich Hauser, an analyst at Credit Suisse Securities in London. CNH fell 10 percent in New York trading yesterday after reporting fourth-quarter profit that missed analysts’ estimates.

Fiat Industrial rose as much as 5.5 percent in Milan trading and was up 3.9 percent at 7.78 euros at 11:07 a.m. The stock has declined about 12 percent since it began trading in January 2011, while Fiat has plunged about 37 percent. The carmaker also reports earnings today.

Harvesters

European revenue at CNH, or Case New Holland, was restrained by the sovereign-debt crisis, and sales in Latin America were hurt by deferred spending on heavy equipment, the division said yesterday. The unit’s products include sugar-cane harvesters, sprayers and excavators.

Iveco and the powertrain division, which makes engines for Fiat Group companies and other manufacturers, probably can “make up the profit shortfall” from CNH, Hauser said. Iveco sales rose 9.9 percent to 2.79 billion euros.

Fiat Chief Executive Officer Sergio Marchionne spun off Fiat Industrial from the automaker to allow each manufacturer to focus on a narrower product range and develop partnerships. The CEO, who also runs Chrysler Group LLC, has said that different capital requirements justified the separation of Fiat’s industrial and automaking operations.

Fiat Industrial’s Iveco unit is “eminently saleble,” Marchionne said in November, according to Max Warburton, a London-based analyst at Sanford C. Bernstein. Daimler AG, Germany’s third-largest carmaker, and “Far East” competitors are “two classes of buyers who will be anxious to try and strike up an arrangement,” Warburton wrote in a note to clients Dec. 5, citing the executive.

Fiat Industrial proposed a dividend for 2011 performance of 18.5 cents per ordinary share and said it favors distributing 25 percent to 35 percent of consolidated net income each year.

--Editors: David Risser, Robert Valpuesta

To contact the reporter on this story: Tommaso Ebhardt in Milan at tebhardt@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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