TURIN - Fiat Group's 1996 net profits rose 10.4 percent to L2.4 trillion ($1.4 billion).
However, the group's operating profits were badly hit by the price war in Italy. Operating profits fell 46 percent to L1.8 trillion. Only the sale of major assets, such as a 31 percent stake in New Holland, allowed net profits to rise.
Sales rose only 4 percent to L78 trillion.
Operating profits also fell in the first quarter of 1997, by 11 percent to L450 billion ($269 million). But pretax profits rose 6.6 percent to L495 billion, on sales that were up 4.4 percent.
The carmaker subsidiary Fiat Auto SpA made a loss after tax of 75 billion ($44.1 million) in 1996. This compared with an after-tax profit in 1995 of L803 billion ($472 million).
The company's operating profit was down 64.3 percent to L470 billion ($276.5 million). Fiat said this 'decline (in operating profit) was caused mainly by the unfavorable effect of the stronger lira on export revenues and by keener price competition.'
Fiat Auto blamed a heavy tax bill for the loss: 'The tax liability was especially burdensome in 1996, because consolidated tax returns are not allowed under Italian laws.' The company is expected to return to profit in 1997.
Sales for 1996 were up 3.2 percent to L42.5 trillion ($25 billion). But sales rose 5.3 percent in the first quarter of 1997 to L11.8 trillion, mainly thanks to incentives in Italy, where volumes were up 14 percent. Car sales were also up in Poland, by 10.8 percent, and in Brazil, where unit sales rose 26.6 percent. Fiat Auto sold 628,000 vehicles in the first quarter, a rise of 3.7 percent on the 1996 period.
Fiat Group proposes to issue one bonus share to all shareholders for each 10 shares they hold. This would be better value for shareholders than increasing dividends, which are taxed in Italy.
Shareholder will vote on the proposal at the annual meeting in June.