MILAN (Bloomberg) -- Fiat Group reported better-than-expected second-quarter profit, boosted by spending cuts in Europe and strong Chrysler sales in the United States.
Fiat's trading profit, or earnings before interest, taxes and one-time items, increased 9 percent to 1.03 billion euros ($1.37 billion) from 947 million euros a year earlier, Fiat said today in a statement. The result beat the 931 million-euro average of four analyst estimates compiled by Bloomberg.
Net profit was 435 million euros, compared with 239 million euros in the same quarter last year, Fiat said. Revenue rose 4 percent to 22.3 billion euros.
Fiat's loss in Europe narrowed to 98 million euros from 138 million euros a year earlier.
Fiat is relying on Chrysler and its 39 consecutive monthly U.S. sales gains to sustain profit amid its European losses. Without Chrysler, Fiat would have posted a loss of 247 million euros in the second quarter.
In a separate announcement today, Chrysler said its net income rose to $507 million from $436 million a year on higher demand for the Jeep Grand Cherokee and Ram pickup trucks. Revenue advanced 7 percent to $18 billion.
Chrysler lowered its target for full-year earnings. It forecast operating profit of $3.3 billion to $3.8 billion, compared with a previous target of about $3.8 billion. The company predicted deliveries of about 2.6 million vehicles, compared with a range of 2.6 million to 2.7 million.
Fiat-Chrysler CEO Sergio Marchionne has scaled back investing in new models for Europe with the region's car market mired in a six-year slump. Fiat's car sales dropped 10 percent in Europe in the first half, worse than the 7 percent industrywide decline.
To become more global, Fiat is seeking to buy the remaining shares in Chrysler and merge with the U.S. carmaker. A merger would allow Fiat, which also owns the Alfa Romeo, Maserati and Ferrari brands, to tighten cooperation with Chrysler and its Dodge and Jeep nameplates.
2013 profit forecast
Fiat stuck to a forecast of increasing 2013 trading profit to between 4 billion euros and 4.5 billion euros from 3.81 billion euros in 2012. The company will probably report 3.83 billion euros of trading profit this year, according to the average of 11 analyst estimates compiled by Bloomberg before second-quarter results were released.
Fiat aims to end losses in Europe by 2016. Instead of shutting additional factories in Italy, after closing one in Sicily at the end of 2011, Marchionne plans to fill underutilized factories with more upscale models, such as the Maserati Quattroporte sedan and the Alfa 4C sports car. Those plans may be in jeopardy. Marchionne earlier this month threatened to move production of new Alfa Romeo models abroad as Italy's labor rules hamper its ability to compete with premium carmakers.
Marchionne put new investments in Italy on hold as it pushes Prime Minister Enrico Letta's government to adopt reforms that help manufacturers with clearer work rules after Fiat's labor contracts suffered a setback in Italian courts.
To merge with Chrysler, Fiat first has to buy the 41.5 percent stake owned by the United Auto Workers' retiree health-care fund, or VEBA. The two sides are in court disputing the price for a portion of the shares Fiat is seeking to purchase by exercising options it holds. Fiat has yet to take possession of 10 percent of Chrysler shares that it's seeking after exercising three options while a judge in Delaware considers how much Fiat should pay for the initial tranche.
