sp threatens fiat downgrade on weak auto market
Last Updated : GMT 06:41:18
Arab Today, arab today
Arab Today, arab today

S&P threatens Fiat downgrade on weak auto market

Arab Today, arab today

Arab Today, arab today S&P threatens Fiat downgrade on weak auto market

Milan - AFP

Italy\'s Fiat has been hit by weak markets in Europe and Brazil and reliance on its US partner Chrysler, Standard & Poor\'s ratings agency warned Monday as it threatened to downgrade the auto giant. Stock in Fiat and truck maker Fiat Industrial fell sharply over the announcement, with their shares dropping by more than two percent while the benchmark FTSE Mib index in Milan was down 0.3 percent. Fiat, which also owns luxury car makers Ferrari and Maserati, is Italy\'s biggest private sector employer and has a workforce of 200,000 worldwide. The company is also important component of the industrial structure in Italy, the eurozone\'s third largest economy and a major world exporter. \"We see weakening demand in Europe\'s over-supplied mass vehicle market, particularly Italy\'s, as likely to pressure Italy-based Fiat Spa\'s profits and cash flow,\" the ratings agency said in a statement. \"Concurrently, Brazil, Fiat\'s strongest market, is the site of increasing competition that has eroded the company\'s leading market share,\" it said. \"Standard & Poor\'s believes this environment will cause Fiat\'s European operating performance to deteriorate in 2012,\" it added. S&P said it was therefore placing Fiat\'s BB long-term corporate credit rating and BB issuer ratings on the company\'s senior unsecured notes \"on credit watch with negative implications.\" The agency said it had also noted \"Chrysler creditor agreements that limit Fiat\'s access to cash and a cross-default clause that comes into effect in one Fiat indenture based on Chrysler being consolidated.\" It said it would revise its outlook depending on \"how severely these conditions will affect Fiat and the extent to which new products, cost cutting, and other measures by management can mitigate the negative impact.\" Shares in truck maker Fiat Industiral slid 2.82 percent to 7.76 euros at the close of trading, while Fiat lost 2.06 percent to 4.56 euros. Fiat earlier this month said that its net profit in the fourth quarter of last year rose to 265 million euros ($346 million) from 153 million euros in the same quarter of 2010. The company\'s results were lifted by Chrysler, with total net profit coming to 1.7 billion euros over the year. But it warned that the result would likely be lower this year due to the \"uncertainty\" on European markets. It said it was forecasting a profit of 1.2 to 1.5 billion euros. Sales of passenger cars and vans were down 2.4 percent in 2011 at 2.03 million vehicles, with a 7.6 percent increase in van sales failing to offset a 4.6-percent decline in passenger car shipments, Fiat said. But sales in Brazil were up 1.5 percent from 2010, it added.  

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