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Fiat Posts Losses, Rules Out Chrysler Investment

Will cut 10%-15% of workforce at CHN

Fiat Group reported a first quarter loss of 411 million euros (US$537 million) on April 23 and ruled out any direct investment as part of a mooted deal with U.S. peer Chrysler.

In the earnings report, Fiat Group Automobiles reported an operating loss of 30 million euros and a 17.6% production decline on a 12-month comparison but said that "demand trends improved during the first quarter."

The company said its car market share went up in France, Germany and Italy, and car scrapping incentives in France and Germany helped boost sales, with deliveries rising by 4.4% in France and 192.8% in Germany.

The results came as an April 30 deadline set by the U.S. administration for Chrysler and Fiat to strike a deal loomed. Fiat said it would make no cash investment and the deal would be an exchange of Fiat assets in return for Chrysler equity.

"The alliance does not contemplate Fiat making a cash investment in Chrysler or committing to funding Chrysler in the future," it said. "Final terms for this transaction continue to be negotiated with the U.S. Treasury and other relevant stakeholders. If negotiations are concluded successfully, final terms will be set on or before April 30, 2009."

Fiat's chief executive, Sergio Marchionne also said that Fiat would cut 10% to 15% of jobs at its loss-making U.S. subsidiary CNH, an agricultural and construction equipment maker that employs around 31,000 people. The cuts would affect up to 4,600 jobs.

Fiat Group still lowered its net profit forecast for 2009 as a whole from 300 to 100 million euros and predicted a 20% slump in demand but said its trading profit would remain unchanged at more than one billion euros.

Copyright Agence France-Presse, 2009

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