Italian automaker Fiat is forecast to have returned to profit in the second quarter when car sales benefited from tax breaks, but analysts looking under the bonnet say trucks and tractors are still troubled.
Chief executive Sergio Marchionne has said this year will be the toughest he has faced but is still predicting a trading profit of more than 1 billion euros ($1.4 billion) and debt being cut below 5 billion euros.
Analysts at Cheuvreux expect Fiat to be the only mass-market carmaker in profit in the first half of 2009.
For the second quarter, the average forecast was for a trading profit of 245 million euros, down from 1.13 billion euros a year ago. Fiat made a first-quarter trading loss of 48 million euros.
Other car companies are also expected to show the impact of falling sales when they report later this month.
Looking ahead, a lot will depend on whether governments continue to provide tax breaks for trading in old cars for environmentally-friendly models, an area of Fiat strength.
The Italian company's expertise in small, fuel-efficient vehicles is such that it won a 20 percent stake in U.S. car giant Chrysler on the promise of a transfer of knowledge.
Analysts are hoping Marchionne might give some indication on plans for Chrysler, which will likely include cutting models.
But he is unlikely to oblige, as the two companies are still run as separate entities. One analyst suggested he might at least set a date for a briefing with investors on Chrysler.
While Fiat sales in Europe and Brazil, its second-biggest market after Italy, are buoyed by sales incentives, analysts will want to see cost cuts and improved cash flow.
"Fiat should have benefited most from market strength in Brazil and the pull of incentives," analysts at UBS said in a research note.
