Fiat’s debt rises as car sales fall 14pc in Europe

City A.M. Reporter
FIAT said yesterday its debt grew by about €1bn (£850m) in 2012 as European car sales tumbled 14 per cent, leaving the Italian carmaker ever more dependent on strong growth at US unit Chrysler.

As Fiat’s management moves to increase spending on new models in Europe and the United States, investors are keeping a close watch on its debts for signs that cash-burning European operations are straining the group’s crucial ability to invest in products that will win customers in the future.

Fiat, suffering from a brutal sales downturn in Europe, said it did not expect business conditions to change in 2013 from its previous forecasts and that its home region “continues to present significant levels of uncertainty.” Fiat’s net debt rose about 18 per cent to €6.54bn during 2012, a better performance than nearly all analysts had expected.

Chrysler is also spending on new models and said separately it expects cash flow to slow to $1bn or higher in 2013, from $2.2bm in 2012.

Total available liquidity for the group was €20.8bn, slightly higher than year-end 2011.

Fiat said its full-year loss before interest and taxes in Europe, where car sales are entering their sixth year of decline, was €738m. It has said it does not expect to break even in Europe before 2015. It pared fourth-quarter losses in Europe before interest and taxes to €165m, down from €298m the same time last year.