Italian industrial giant Fiat reported a surge in profits for the third quarter today, though the figures showed the company's car arm is struggling as scrappage subsidies fade.
Fiat, which picked up a key stake in US giant Chrysler during the economic crisis, said that in the third quarter net profit jumped to €190m from €25m the same time last year. Current profit, a key indicator of operating performance, nearly doubled to €586m from €308m while sales rose by 11.9% to €13.479 billion.
The positive results were due to the performance of CNH, its agricultural and construction equipment unit, Iveco, the commercial trucks branch, and the engines division and components.
But the company's automobile arm, which comprises the Fiat, Lancia and Alfa Romeo brands, is struggling as government subsidies in Europe end. Subsidies to buy more environmentally friendly cars during the global economic crisis had particularly benefited small Fiat cars.
In view of the results, the group ramped up full-year targets. Fiat said it was now looking to achieve a net profit of about €400m, having said previously it expected a result close to zero.
Current profit should be at least €2 billion from a previous target of €1.1-1.2 billion and sales should exceed €55 billion instead of more than €50 billion.
In the third quarter, the number of vehicles sold by the group dropped by 10.7% to 481,300 units and the current profit at the automobile arm fell by around 16%. But sales remained stable thanks to favourable exchange rates.
Fiat has decided to split the group, merging CNH and Iveco to create a new entity called Fiat Industrial.
The Italian company aims to become one of the world's biggest car manufacturers, capable of producing over six million vehicles in 2014 compared to current production levels of less than four million.
