Earnings Preview: Fiat to report Q3 results

COLLEEN BARRY

ROME (AP) — Fiat SpA CEO Sergio Marchionne is expected to outline the company's strategy for its Italian plants after the release of the carmarker's third-quarter earnings on Tuesday.

The Italian company, which controls Chrysler LLC, has been under pressure from unions and politicians to discuss its investment plans since Marchionne backed off on an earlier scheme to invest some €20 billion ($25.8 billion) over five years to boost Italian production. The financial crisis has taken the bottom out of Fiat sales in its home European market and has forced the company to periodically idle plants.

Marchionne, who discussed the carmaker's predicament with the government last month, is looking at refocusing its Italian plants on exports. The CEO will brief unions on his plans later Tuesday.

SALES: Fiat sales are down 20 percent in the first nine months of the year, to 1 million vehicles from 1.37 million a year earlier. In September alone, they dropped 25.7 percent. That's in a European auto market that dropped 7 percent in the first three quarters of the year, according to ACEA, the European automakers association.

SHORT-TERM LAYOFFS: Fiat plants in Italy have been greatly underutilized due to the economic crisis. The state-of-the-art Pomigliano plant, which employs some 2,150 workers and where Fiat recently invested €800 million, is being idled from Oct. 29 to Nov. 11, during which period workers receive reduced pay. Other plants also have been shut down for stretches.

WHY IT MATTERS: Fiat controls U.S. automaker Chrysler, whose strong North American sales have helped keep Fiat profitable. Fiat will confront the dilemma over whether to invest in its Italian plants just a week after Ford Europe announced it would close two factories, putting some 6,200 workers in Britain and Belgium out of a job and taking out 18 percent of its European capacity. On the other end of the spectrum, the French government has offered €7 billion in aid to PSA Peugeot, the No. 2 carmaker in Europe, in an attempt to stave off 9,500 layoffs.

WHAT'S EXPECTED: Analysts polled by FactSet expect the company to earn €178 million in net income on €19.4 billion in revenues.

LAST YEAR'S QUARTER: Fiat posted a 67 percent increase in 2011 third-quarter profits on higher sales of Chrysler cars and trucks in North America. Net profit in the period was €112 million, up from €73 million a year earlier.