Analysts Expect Fiat to Miss Its Debt Target for 2012 image

Analysts expect Fiat-Chrysler to miss its debt target for 2012 as CEO Sergio Marhionne will report last year’s earnings later today.

Analysts will keep a close eye on Fiat’s debt, as the automaker’s management plans to increase spending. Over the past three decades Fiat’s share price surpassed rivals such as VW and Peugeot, due to hopes that the automaker might increase its 58.5% stake in Chrysler or succeeds in a full-scale merger.

“We do not believe Fiat will reach its net industrial debt guidance due to overproduction in Europe in the fourth quarter,” Commerzbank wrote in a preview note. “We are concerned by the high net debt pile which limits Fiat’s options with regard (to) Chrysler and future investments.”

Analysts expect Fiat’s 2012 net industrial debt to be around 6.61 billion euro, but estimates range from 6.55 billion to 6.81 billion euro. The Italian automaker’s net debt target is 6.5 billion euro. Fiat expects a full-year loss of 700 million euro in the European market, as auto sales are entering their 6th year of decline. The company is confident that it will manage to break even by 2015.

On October 30th Fiat cut its 2012 targets, expecting a group trading profit of 3.8 billion euro, net profit of 1.2 billion euro and net debt of 6.5 billion euro.