High cost Fiat profit tips

Despite the sales growth that took the mark to new record in Brazil, inflationary pressures on the cost structure and greater competition in the market-with effects on prices-downed Fiat gains in the country in 2012.
The stock of Fiat automobiles published yesterday shows that the automaker's profit fell 17.6% last year, to $ 1.2 billion. Net revenues rose 11.4%, reaching R $ 23.9 billion, but this performance was neutralised by the increase in operating costs and expenses.
Only the cost of production had increased by 17%, to $ 19.8 billion, while operating expenses rose 3.2%, totaling r $ 2.4 billion during the year. Although the selling expenses have retreated 1.5%, General and administrative expenses rose 8.1%. Were recorded in the financial statements negative impacts of higher materials costs and export rates. With this, the profit before financial results-an indicator of operating performance-fell 20.4%, to r $ 1.8 billion.
Fiat said that the result was affected by increased competition in the domestic market, along with the inflationary pressure on costs.
In sales volume, the company had its best performance in 36 years of history in the country. The brand rose 11.1% plates issued on 2011, totaling 838.2 million automobiles and light commercial. It was an expansion of 10.2% compared to the previous record, established in 2010, when 760.5 million units have been sold. For the eleventh year, Fiat has maintained the lead in the Brazilian market, with 23.1% share in total sales. Exports, however, fell 5.5% to r $ 2.3 billion last year.
The balance sheet, in addition to the automaker's operations in Brazil, which include the financial statements of the subsidiary of Fiat in Argentina, FPT-group in the arm-and TCA, the automotive components Division.
In the report, the Administration points out that 2012 was marked by an economic slowdown scenario in Brazil and in China, by the European recession and a slow recovery in the United States. Even so, the automaker recalls that the car market showed an above-average performance of the economy, registering a growth of 6.1% in plates issued last year.
Despite external unfavorable scenario, the company assesses that the prospects are promising for the Brazilian economy in 2013, so that the group maintains its investment program in the country. Last year, the Brazilian subsidiary of Fiat invested r $ 1 billion in targeted resources, mostly to the increase in production capacity of the factory in Betim (MG)-800 000 to 950 thousand cars a year by 2014-and the beginning of the building of the new industrial complex in Goiana (PE).