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Big winner but bigger losers at results time

Ford and GM are having a difficult time. The two big French carmakers are not looking as sharp as they did. DaimlerChrysler wants to end its alliance. The only non-Asian car company now smiling is Fiat.

The results season should have started with Ford and General Motors but Ford came out alone. GM admitted in January that it could not get its numbers to add up and would have to go through them again. We are still waiting. Whether they will show an improvement is uncertain; simply having to take them back for reconsideration is uncomfortable.

Ford declared the biggest loss in its corporate history – probably the biggest loss in anybody’s corporate history. Fiat then presented an early snapshot of its results and proved that there is only one answer to a full-blown crisis – to put a man in charge who knows what he is doing.

At Ford and PSA Peugeot Citroën there is a new boy on probation. Alan Mulally is ex-Boeing and Ford’s new CEO. His first public observation of note was that he had never come across a company with such inconsistency of purpose. Followers of the will-sell-won’t-sell saga at Jaguar will understand his point of view.

The new PSA man is Christian Streiff, most recently at Airbus. He is 100 days into the task of succeeding Jean-Martin Folz who had 10 years at the helm. Streiff has been forced to concede that much is wrong and that much needs to be decided.

France is the only country in Europe with two national volume car companies. Renault reported the day after PSA and Carlos Ghosn, the chief executive, has lost some of the self-confidence that has marked his extraordinary rise. Although the financials were satisfactory, there were signs of stress in the figures that left analysts hesitant over the forecasts.

Ford: The loss, including special items, was $15.2bn (£7.75bn). Almost all of it was in North America. Ford of Europe managed a profit of $469m (£240m) on sales of $8.8bn (£4.5bn). There were 494,000 vehicles sold in Europe. The Premier Auto Group lost $327m (£168m) for the year but in the fourth quarter the Volvo, Jaguar, Land Rover, Aston Martin group made $191m (£98m).

Fiat: The Italian firm has had three years of leadership from Sergio Marchionne.

He reported astonishingly good group trading profit ahead of guidance at €2bn (£1.34bn), 3.8% of sales and twice 2005 levels on more than 11% revenue growth to €52bn (£35bn).

Cars hit the two million unit target which was 17% up on last year, its highest level since 2001. The trading profit up €572m (£385m) to €291m (£196m) was the first positive financial year since 2000. A rich seam of product is coming on, starting with Bravo.

Renault: Renault’s results were quite strong considering the huge 11% loss of European market share. Nissan – over which Renault has control through a 44% holding – fared even worse in Europe and declined by 12.3%.

Despite that, Carlos Ghosn, the hero who rescued Nissan from bankruptcy before taking the reins at Renault, has said that the company will make progress this year.

Reported results for 2006 were operating profits of €1.63m (£1.1m). That was an operating margin of 2.6%, just above the 2.5% that Ghosn had forecast.

He has shown considerable courage by promising 3% this year. Ghosn believes that he will continue to show decline in the first half but recover it in the second as new models come into play.

Ghosn is also sticking by his forecast of 6% margins in 2009 – a level of profitability usually seen only by prestige car makers. It will need some out-performance of the market. Renault has done well outside Europe but still lost 4% global volume because of the slide in Europe.

The size of Nissan’s dividend to Renault is threatened by a downturn in its fortunes. Nissan has just reported a 23% drop in its last quarter’s earnings, the first serious reverse since Ghosn arrived as saviour in 1999.

PSA Peugeot Citroën: PSA has also had a hard time in its own home market of Europe. Globally sales remained quite firm – down less than 1% at 3.366m units. The important launches did well. The Citroën C4, the new light van and the Peugeot 207 all hit the spot.

At the operating level, the margin was just below Renault at 2% but the net profit after special items dropped from over €1bn (£673m) to less than €200m (£135m). Streiff will deliver his ideas for lifting performance in September.

DaimlerChrysler: Dieter Zetsche is the chairman of DaimlerChysler and the former president of Chrysler. So it is telling that it is he who has decided that the 1999 merger must end.

Last week Chrysler finally admitted to a $1.5bn (£769m) loss for 2006, called for 13,000 job losses and said that “…all options were on the table.”

The job cuts will be over three years. Chrysler aims for a profit of $3bn by 2009.



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