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Southwest Illinois | Doesn't sound like anything is for sale.
April 21 (Bloomberg) -- Fiat SpA, Italy’s biggest carmaker, plans to separate its agricultural and truckmaking units from carmaking and aims to double revenue at the auto division by 2014.
The spinoff will separate CNH Global NV, Iveco and the industrial and marine operations under Fiat Powertrain into a new company called Fiat Industrial SpA, leaving Fiat Auto and other car components businesses including engines in Fiat, the Turin-based company said today in a presentation. Fiat Chief Executive Officer Sergio Marchionne will run the car business.
Revenue from carmaking will rise to 51 billion euros ($68 billion) from 26.3 billion euros in 2009, Fiat said. The separation would give Marchionne, who is also CEO of Chrysler Group LLC after acquiring a 20 percent stake in the U.S. carmaker last year, an entity to facilitate future car alliances. Fiat Auto accounted for 56 percent of the group’s 2009 sales.
“If I have any talent at all, it’s in the revival of the car business,” Marchionne told investors in Turin. “There is no longer any reason to keep together two sectors that operate from such diverse industrial and financial logic. The existing structure no longer serves any useful purpose.”
Fiat rose 18 cents, or 1.7 percent, to close at 10.60 euros in Milan, after earlier falling as much as 5.2 percent. CNH fell 3 percent to $31.13 at 12:35 p.m. in New York.
Bond Repayments
“CNH is falling because it’s the best company among the industrial units that will be spun off,” said Karim Bertoni, who helps manage $18.5 billion at Geneva-based Banque Syz & Co. “In the future they should be considered all together with Iveco, and Powertrain Unit, that are less interesting.”
Fiat today forecast group sales will total 93 billion euros by 2014. The spinoff will probably be completed by the end of the year, the company said. Fiat sees no significant obstacles to the separation, which will not trigger early bond repayments, according to the presentation.
Cost savings and sales growth stemming from Fiat’s partnership with Chrysler, the third-largest U.S. carmaker, will reach 1.5 billion euros by 2014, with combined car sales totaling 6 million vehicles, the Italian company said. Fiat plans to merge Chrysler with its Lancia brand while positioning the U.S. division’s Jeep sport-utility vehicle unit as a global brand.
“Marchionne is doing the spinoff to pull together Fiat and Chrysler,” Pierluigi Bellini, an automotive analyst at Global Insight in Milan, said in a phone interview.
Quarterly Loss
Fiat today reported a first-quarter net loss of 25 million euros from a year-earlier loss of 410 million euros. Analysts had projected net income of 51.6 million euros. Fiat returned to a profit on the basis of earnings before interest, taxes and one-time gains or costs. Sales climbed 15 percent to 12.9 billion euros.
Vice Chairman John Elkann, an heir to the Agnelli family, will succeed Luca Cordero di Montezemolo as chairman, Fiat said yesterday. Elkann, the grandson of former Chairman Giovanni Agnelli, is currently Fiat vice chairman and head of the family’s holding company.
To contact the reporter on this story: Sara Gay Forden in Turin, Italy, via [email protected].
Edited by Lookingglass 4/21/2010 15:28
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It's Official. Fiat Spinning Off CNH Global
