MILAN – Italian truck and tractor maker Fiat Industrial SpA cut its 2013 targets after sales in recession-hit Europe continued to fall, pushing its truck unit to a first-quarter loss that missed analysts' expectations.
The company, which competes with Caterpillar Inc and Deere & Co , said on Tuesday it now sees truck sales in the European market falling by between 5 percent and 10 percent in 2013, slashing a forecast made as recently as January that the truck market would be flat this year.
Fiat Industrial shares slumped 5.3 percent by the close, making the stock the worst performer in the FTSE MIB blue-chip index and more than wiping out its gains of the past four sessions.
Robust sales of Case New Holland's huge, high-margin tractors and harvesting combines could not offset declines in trucks and construction equipment, as building and freight hauling withered still further in an uncertain economy.
Revenue at truck unit Iveco, which accounts for about one third of group sales, fell 4 percent to 1.82 billion euros, pushing Iveco to a trading loss of 9 million euros compared with a profit of 63 million a year ago.
"Iveco's strongest markets are the ones in southern Europe that are suffering the most," said Chairman Sergio Marchionne on a conference call, adding that the truck market hit the bottom in the first quarter.
Analysts were expecting a trading profit at Iveco of 55 million euros.
Fiat Industrial said it saw full-year revenue growing by between 3 and 4 percent, down from a previous forecast of a 5 percent increase. Group trading profit was 411 million euros in the first quarter, below the 435 million expected by an analysts' consensus published on the company's website.
Fiat Industrial added in a statement that it saw net industrial debt at between 1.4 and 1.6 billion euros this year, up from the range of 1.1 to 1.4 billion euros it forecast at the end of January.
At its agriculture and construction equipment arm CNH, net revenue was flat at 3.79 billion euros, while trading profit rose to 411 million euros from 368 million. All of that growth came from farm equipment, where sales rose 8.3 percent.
Construction equipment sales plummeted 26.9 percent as demand slowed in every region, the company said.
Fiat Industrial plans to merge with U.S. unit CNH later this year to create the world's third-largest capital goods maker. Merger plans are on track, Marchionne said, saying he expects to call the shareholders' meetings necessary to approve the merger in May.
"We are in the process of filing with SEC (Securities and Exchange Commission)," he said, adding the merged company plans to list its shares in the United States in the third quarter of this year. It will have dual U.S.-Italy stock market listing.
(Editing by Helen Massy-Beresford and David Holmes)