Fiat confirms 2008, 2009 profit targets

By Giselda Vagnoni

ROME (Reuters) - Fiat SpA will meet its profit and cashflow targets this year and next, the Italian industrial group's chief executive said in an apparent bid to ease investor fears about the consequences of another month of weak car sales.

Italy's transport ministry will publish new car registration figures for June later in the day, and Fiat Chief Executive Sergio Marchionne previously said they would be just as "disastrous" as the previous month, when they fell 17.6 percent.

Promotor, an Italian research group that closely follows the industry, has also forecast a weak month, saying sales, orders and showroom visits were all in decline.

Fiat shares were down 3 percent at 10.10 euros, underperforming the DJ Stoxx sector index, which was down 2.17 percent as France and other European countries published anemic car sales figures for the month.

Record high oil prices and a weakening economy have made drivers postpone plans to buy new cars this year. The rise in raw materials prices has also made life difficult for car makers as they struggle to keep their margins up in the fiercely competitive sector.

But Marchionne said Fiat was holding the line.

"Despite what is happening, we are not only keeping our 2008 profit and cash flow forecasts, but we confirm those for 2009," he told a conference.

Marchionne has repeatedly confirmed the group's forecasts in the last few weeks, but his latest remarks included those for 2009 for the first time.

As part of its recovery, Fiat has set itself a series of ambitious targets. For 2008, it is aiming for a higher trading profit of 3.4-3.6 billion euros and 4.3-4.5 billion euros for 2009.

Apart from confirming forecasts, Marchionne has also expressed confidence in Fiat maintaining a more than 30 percent share of its home market in Italy. In May, its car sales fell 12.6 percent, giving it a market share of 32.67 percent.

The higher cost of raw materials has forced Fiat to raise prices for all its car brands by an average 1.5 percent.

Its truck division, Iveco, plans to raise them for heavy vehicles by 2.5 percent, while its U.S. farm equipment maker, CNH Global, is slapping a 5 percent surcharge on its tractors and combines.

"Half of a car is made of steel. We can't make it out of chocolate," Marchionne said.

(Additional reporting by Jo Winterbottom; Writing by Gilles Castonguay, editing by Will Waterman)