FIAT SHAREs SOAR AFTER AMBITIOUS 5-YR PLAN FOR CHRYSLER
FIAT SHAREs SOAR AFTER AMBITIOUS 5-YR PLAN FOR CHRYSLER
(ANSA) - Milan, November 5 - Fiat shares rose sharply on the Milan stock exchange Thursday, a day after it presented its ambitious five-year business plan for American carmaker Chrysler.
The stock actually opened 2.59% lower but after some 30 minutes of trading it was already up by 1.2% and two hours later was 2.5% higher, to then jump by 3.2% by noon.
Trading was also very high and at noon some 48 million shares had changed hands, compared to 64 million for the previous 30 days.
Fiat Chairman Luca Cordero di Montezemolo said on Thursday that the plan for Chrysler was ''clear, with precise targets from every point of view.''
In an eight-hour presentation at Chrysler headquarters in Auburn Hills, outside Detroit, Fiat Chief Executive Officer Sergio Marchionne, who holds the same post at the Americana automaker, illustrated his long-awaited plan which included a major revamping of car models, financial projections and organizational and production changes.
The plan called for boosting sales from 1.3 million vehicles this year to 2.8 million at the end of the five-year period and expanding the automaker's US market share from its current level of less than 9% to more than 13% in 2014.
From a financial standpoint, Marchionne said Chrysler will invest $23 billion over the next five years and that revenue next year will rise to $42.5 million to then climb to $67.5 billion by 2014.
He added that the US automaker already next year will see a break-even operating profit while net income will break even the following year, when there will also be a positive cash flow.
Thanks to a total operating profit of some $14 billion for the five-year period, the CEO said, Chrysler plans to pay back its American and Canadian government loans by 2014 and reduce its total debt from its current level of $13 billion to $8 billion.
According to Marchionne, ''these forecasts are more than conservative,'' adding that ''we don't have a worst-case scenario because it is management's duty to be optimistic''.
''No one on our team will be lagging and what is important is our readiness to compete. This is Chrysler's last chance and we can't screw it up,'' the CEO said.
In regard to production, Chrysler by 2014 plans to have a total of 21 models and share three platforms with Fiat as well as the Italian automaker's cutting-edge green and diesel technology.
The new model lineup, most hitting showrooms in 2011 and 2012, will include a number of compact cars to fill a market segment where Chrysler has been absent.
The five-year plan also includes revamping its commercial vehicle division, to be under the Ram marque, with the introduction of two Americanized versions of popular Fiat vans.
Chrysler facilities will also be used to produce Fiat's new 500 city car and a number of Alfa Romeo models, although sales of these cars are not expected to have a great impact on Chrysler's balance sheet.
However, their production will allow Fiat to achieve established benchmarks and increase its stake in Chrysler from its initial 20% to 35%, which could rise to over 50% once government loans are paid off.
Observers believe that one of the biggest challenges facing Fiat and Chrysler will be convincing the American buyer that the new models will be worth waiting for, also in view of the fact that in the past neither company enjoyed a great reputation for reliability.
However, at the marathon presentation Marchionne said the commitment of the American and Italian automakers ''is not to be underestimated'' and that the five-year plan was ''comprehensive, ambitious and serious''.
Fiat acquired control of bankrupt Chrysler earlier this year in a no-cash deal which saw the Italian automaker offer its technology and know-how in exchange for a 20% stake. photo: the new Chrysler symbol
