Chrysler Earnings Save Fiat from Big Loss

Fiat SpA's group net profit slid 18% from 2011 to €1.4 billion ($1.9 billion) last year as the company's deep losses in Europe were offset by profits from affiliate Chrysler Group.

Revenue grew 12% to €84 billion ($113 billion), and global shipments of mass-market vehicles surged one-third to 4.2 million units. Fiat's operating earnings rose 18% to €3.8 billion ($5.1 billion) in 2012 despite a €700 million ($942 million) loss in Europe.

Comparisons to 2011 were especially favorable because Chrysler results were only consolidated for the last seven months of that year.

Excluding the U.S. company's contribution, Fiat swung to a €1 billion ($1.3 billion) net loss in 2012 from a €1 billion profit the previous year. Parent-only operating income shrank two-thirds to €355 million ($478 million), and revenue dropped 5% to €35.6 billion ($47.9 billion). The sharp declines in part reflect the slumping European auto market and the company's high fixed costs in Italy.

For the full year, Fiat's business consumed €2.5 billion ($3.4 billion) in free cash compared with a €393 million ($529 million) outflow in 2011. The company's own operations ended 2012 with €9.1 billion ($12.2 billion) in cash.

Analysts are closely watching Fiat's cash position and rate of cash burn because the company needs to keep investing in new models. Fiat can't touch Chrysler's cash until the two carmakers are fully merged.

In the fourth quarter, group net earnings soared 46% year on year to €388 million ($522 million), and revenue grew 11% to €21.8 billion ($29.3 billion). Shipments of mass-market vehicles gained 9% to 1.08 million units.

Excluding Chrysler, Fiat posted a €241 million ($324 million) net loss for the October-December period compared with a €201 million ($270 million) loss a year earlier. Revenue dipped 2% to €9.2 billion ($12.4 billion).