(AP) — Fiat Group SpA, controlling stakeholder in Chrysler LCC, on Monday reported a fourth-quarter loss due to a sharp decline in sales of trucks and construction equipment — even as sales of its small, fuel-efficient cars rose thanks to cash-for-clunkers incentives.

The quarterly loss of euro281 million ($397 million) compares with a net profit of euro163 million in the same period a year earlier.

The company also reported a loss for the full year, but cut its net debt level more than anticipated and significantly strengthened its cash position.

It warned that its fortunes in the coming year would depend heavily on whether European governments continue scrapping incentives that have benefited makers of small cars.

Fiat shares were trading up 0.40 percent at euro9.94 on the Milan Stock Exchange.

Fiat CEO Sergio Marchionne also has run Chrysler since the U.S. automaker emerged from bankruptcy last June and Fiat took a 20-percent stake in exchange for its small-car and fuel-efficient engine technology and management know-how. Fiat's compact 500 model is expected to go on sale in the United States by the end of the year.

The alliance is intended to help both automakers achieve "critical mass," which Marchionne has put at between 5 million and 6 million vehicles a year. Last year, Fiat Group Automobiles produced 2.1 million vehicles, in line with a year earlier.

Fiat said its full-year losses totaled euro838 million, compared with earnings of euro1.6 billion for all of 2008. Fiat also reported writedowns by the automobile business for platforms and architectures related to the Chrysler alliance, which were included in euro391 million in charges.

Fourth quarter revenues at the company that makes autos under the Fiat, Maserati and Ferrari brands, as well as trucks and farming equipment, were up 3.5 percent to euro13.6 billion compared with euro13.1 billion a year earlier. Full-year revenues were euro50.1 billion, down 16 percent compared with euro59.6 in 2008.

Revenues for Fiat Group Autos, which includes the Lancia, Alfa Romeo and Fiat brands, were boosted by cash-for-clunkers incentives in key European markets to euro7.2 billion, which Fiat says were the auto business's highest-ever fourth quarter revenues. That compares with euro5.7 billion in the same quarter a year earlier.

Fiat's small car, low-consumption engine technology benefited from the scrapping incentives, particularly in Italy and Germany.

Fiat said 2010 would be "a year of transition and stabilization," with revenues expected to grow 3 percent to 6 percent, trading profit of euro1.5 billion and net debt levels below euro5 billion. But the automaker said those targets are dependent on the scrapping incentives in the European markets. Germany has already opted out, but Italy, Fiat's biggest market, has not yet committed to continuing the schemes.

Fiat forecast demand in Italy, where it has a 30 percent market share, will drop by 20 percent if the incentives are dropped.

In that case, Fiat said revenues would decline by euro2.5 billion and trading profit for the automobile and components businesses would drop, ballooning debt above euro5 billion.

Bernstein's Max Warburton said in a note that "'A year in transition' means one thing: no real earnings growth ... That makes it pretty clear to us that management doubts there will be much progress in 2010."

Warburton expressed concern that the auto margins are near peak "due to unsustainable Brazilian profitability and limited scope for growth in Europe and limited product development firepower."

Warburton was also pessimistic about Fiat's prospects for sustaining a turnaround of Chrysler, that "even if achieved," is unlikely to add substantial value to Fiat.

Trading profit, or earnings before interest, taxes and one-time gains or costs, declined to euro488 million euros from euro663 million euros in 2008. Net industrial debt was reduced to euro4.4 billion, from euro5.9 billion at the end of 2008 due cost cutting and "significant' destocking of all businesses, while the automaker increased its liquidity to euro12.4 billion from euro3.9 billion at the end of 2008.

Trading profit for the year was euro1.1 billion — beating the company's own guidance of above euro1 billion.

Fiat said it intended to resume distributing dividends, paying out an aggregate of euro244 million.

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Back-to-back snowstorms eye LI ... Sunrise wind project nears completion ... Dinner and show Credit: Newsday

Cops: Day care worker intoxicated at job ... Back-to-back snowstorms eye LI ... DOJ drops charges against Adams ... LI Works: Doughnuts

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