MILAN/DETROIT Automaker Fiat-Chrysler FIA.MI set out lower but still ambitious targets for 2012, with newly profitable Chrysler Group forecasting an 18 percent jump in U.S. revenue to make up for depressed conditions in Europe.
Chrysler said on Wednesday it swung to a full-year net profit of $183 million in its second year managed by Italy's Fiat SpA, its first net profit since 1997 and a key milestone after it went bust in 2009 and was bailed out by U.S. and Canadian taxpayers.
Fiat-Chrysler reported a fourth-quarter operating profit of 765 million, bang in line with forecasts, with the U.S. business increasingly offsetting European weakness, contributing 639 million euros, or 84 percent of the total, up from about two thirds in the third quarter.
Fiat-Chrysler CEO Sergio Marchionne said on Wednesday that a scenario whereby Chrysler did the heavy lifting on Fiat's bottom line "cannot be a long term solution," however.
As expected, the transatlantic group cut forecasts for 2012 to reflect a worsening situation in Europe, but the new operating profit forecast of between 3.8 billion and 4.5 billion euros, down from previous guidance of 4.59-5.27 billion, was still well above the 3.18 billion euros analysts predicted.
The new net profit guidance of 1.2-1.5 billion euros was also ahead of market consensus of 1.03 billion.
"Recent events in the last 12 months, and more particularly in the last semester of 2011, have cast doubt on the volume assumptions governing the overall market and our own development plans for Europe until 2014," the automaker said.
The company's new guidance for 2012 revenues is at least 77 billion euros, down from an earlier forecast of 85 billion.
Fiat shares jumped 5 percent to 4.81 euros, despite the target cuts and news that it won't pay a dividend on ordinary shares in 2011.
"The stock has moved on the fact that Mr. Marchionne felt able to offer clear and ambitious guidance for 2102," said Citigroup analyst John Lawson in a note on Wednesday.
Fiat Group Automobiles (FGA), home to the Fiat, Lancia and Alfa Romeo brands, fell to an operating loss of 15 million euros, well below the 105 million profit expected.
FGA's fourth-quarter loss was down to lower sales volumes, and came as the passenger car market fell 3.4 percent in Europe and 9.6 percent in Italy, the company said.
The tough conditions may increase pressure on Fiat-Chrysler and other mass-market carmakers in Europe to seek alliances on products and platforms to cut costs. French car sales fell 21 percent in January as a government incentive scheme was phased out.
Marchionne said last month Fiat-Chrysler may need a partner to meet its 2014 targets of selling 6 million cars and generating 104 billion euros in revenues.
Investors also shrugged off a 2012 debt forecast that was higher than consensus.
Fiat-Chrysler said it sees net debt at between 5.5 billion and 6 billion euros at the end of 2012, compared with an expected 5.7 billion average estimate from analysts. The company had total available liquidity of 20.7 billion euros on hand at the end of 2011, which it said was a sufficient cushion to help it ride out a sharper than expected market drop.
(Additional reporting by Stephen Jewkes; Editing by Helen Massy-Beresford and Will Waterman)