Fiat 2008 fourth quarter profit plunges 69.8 per cent

fiat logoTurin, Italy - Italian industrial group Fiat reported Thursday a 69.8 per cent drop in its 2008 fourth-quarter profit in the face of a global economic slump which has cut demand for cars, the company's main product.

Turin-based Fiat, which earlier this week announced possible merger plans with US carmaker Chrysler, said net profit in the final quarter fell to 180 million euros (232 million dollars) compared to 597 million euros for the same period in 2007.

Full year profit was down 16.2 per cent from euro 2.05 billion in 2007 to euro 1.72 billion.

Fiat shares on the Milan Bourse fell by 9.21 per cent to 4.04 euros by midday following the announcement of the results.

In its statement Fiat, Italy's largest manufacturer and private sector employer said it won't pay a dividend for 2008 to common shareholders.

The Turin-based group also said it has cut its full-year forecast for 2009, predicting profit will fall to "in excess of" 300 million euros, compared with its previous outlook of 2.9 billion euros to 3.1 billion euros.

The biggest slump in Italy's car market since 1993 has forced Fiat, which includes the Fiat and Alfa Romeo brands, to cut the company's financial goals for the first time since CEO Sergio Marchionne brought the company back to profit in 2005.

Also on Thursday, in a separate statement Fiat denied an Italian newspaper report that it is considering raising 2 billion euros to fund a merger with French carmaker PSA Peugeot-Citroen.

Rome-based daily La Repubblica reported that the Agnelli family, Fiat's biggest shareholder, could vote for a capital increase to fund such a merger.

But Fiat spokesman Simone Migliarino said in the statement that reports of "a possible Fiat capital increase are unfounded." (dpa)

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