Fiat demerger gets go-ahead

It's all go at Fiat. The Italian conglomerate reported a net profit of €113 million for the second quarter of this year -- a major improvement from the €179 million loss during the same quarter of 2009.

And not content with putting the GFC behind it, the company has now sought and gained approval from its board of directors to split its operations in two. The board met and approved the demerger on Wednesday of this week, meaning Fiat's car-building business is officially Fiat S.p.A, but the truck, industrial/marine powertrain, agricultural and construction equipment businesses have been hived off and will operate under the name of Fiat Industrial S.p.A. -- a newly incorporated business entity.

Fiat has pencilled in January 1, next year for the demerger to take place officially. At that time, current Fiat shareholders will receive shares in Fiat Industrial "on a one-to-one" basis, according to the company. Company officials contend that the capital for the two business entities will be properly valued by the market, without the value of the car business being dragged down by the industrial business's performance -- or vice versa.

But with revenues for the automotive side of the business improving by 6.7 per cent during the second quarter, could this be a sign that Fiat is divesting itself of the non-automotive business centres to play a more active role in the running of Chrysler?

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