Italian carmaker Fiat SpA on Thursday said first-quarter profits more than tripled, thanks to its U.S. partner Chrysler, which posted its best quarter in 13 years while sales in Europe plunged.
The automaker, based in the northern Italian city of Turin, reported net profit of (EURO)104 million ($137 million) for the period ending March 31, up from (EURO)29 million a year earlier, due to strong North American results and despite losses in Europe.
"Given the circumstances in Europe, we've had an exceptionally strong quarter," CEO Sergio Marchionne told an analyst conference call. "To tell you we are satisfied with the performance of the group overall, I think would be a bit of a stretch."
Fiat's European operations lost (EURO)207 million _ the only region to post a loss. Fiat's car registrations in the region plunged 26 percent to 81,469 units _ far outpacing the market's drop of 6.6 percent in the quarter, according to the European Automobile Manufacturer's Association. Fiat sells cars under brands, including Fiat, Lancia, Chrysler and Alfa Romeo.
Fiat shares closed down 5 percent to (EURO)3.73.
Strong sales at Chrysler, which Fiat controls with a 58.5 percent stake, helped boost the group's revenues, which more than doubled to (EURO)20 billion from (EURO)9 billion in the first quarter of 2010. Chrysler generated (EURO)11.3 billion of that revenue.
"The fact that Chrysler has had a phenomenally strong quarter has undoubtedly come to help," Marchionne said.
Excluding Chrysler, Fiat's revenues fell 5.7 percent due to declining European auto sales. Fiat also suffered a drop in production and deliveries due to a monthlong strike by trailer drivers protesting higher gas prices and government austerity measures. Fiat said the strike caused a loss of about 20,000 units.
Marchionne conceded that the European market had "underperformed" the company's expectations.
Late Thursday, Standard & Poor's said it downgraded Fiat's credit rating further into junk territory, citing its "weak" European performance and rising debt. Fiat's long-term corporate credit rating dropped to "BB-" from "BB."
In all, Fiat sold just over 1 million cars in the quarter, 60 percent of those by Chrysler in North America.
Fiat said it maintained its 2012 targets of (EURO)77 billion in revenue and net profit of (EURO)1.2 billion to (EURO)1.5 billion, despite the absence of any indication that car sales will bounce back in Europe this year.
Marchionne confirmed during the conference call that future investments in Italy beyond those already announced would remain on hold until the market improves, and the company said Fiat's domestic market is expected to register the lowest volumes since 1983 this year.
Marchionne also said the Fiat and Chrysler alliance would be open to a partner to help strengthen its position in Asia, which he called "marginal." But he said no detailed discussions were under way.
A late comer to the booming Asian market, Fiat shipped just 25,000 vehicles to the region last year, up from 17,000 a year earlier, registering a trading profit _ or earnings before interest, taxes and one-time items _ of (EURO)77 million.
Fiat just announced at the Beijing auto show this month a new sedan for Asia called "Viaggo."