Italian auto giant Fiat on Wednesday reported a profitable 2012 largely due to increased sales for its US partner Chrysler which Fiat said would come under its full ownership as soon as possible.
Fiat said its fourth quarter net profit rose to 388 million euros ($525 million) from 265 million euros the year before and added that it was aiming for profits of between 1.2 and 1.5 billion euros this year.
Net profit for the full year was 1.411 billion euros -- higher than the 1.3 billion euros expected by analysts but 14.5 percent lower than in 2011.
Chrysler's results underpinned the group's earnings and Fiat forecast a continued decline in the European car market, with the Italian market plunging by 20 percent to its level in 1979.
Fiat said in its earnings note that it would not be paying a dividend to shareholders and investors punished it on the stock market, with shares falling 4.83 percent to 4.456 euros.
Market conditions in the Americas and Asia "continue to support the financial projections made for 2013 and while the European market continues to present significant levels of uncertainty, the Group confirms its guidance for 2013," it said.
The company, which includes the Chrysler, Ferrari and Maserati brands, said it was also aiming for turnover of 88 to 92 billion euros this year.
Fiat chairman John Elkann said the company had been forced to make "difficult choices" to continue producing in Italy despite the collapse of the market and chief executive Sergio Marchionne said he would not be shutting any Italian plants.
"Despite market troubles, we have made difficult choices to continue producing in Italy," Elkann said at the opening of a new plant for luxury brand Maserati just outside Fiat's hometown of Turin.
Marchionne, who also heads Chrysler, said: "I can confirm that we will not shut any plants in Italy."
The company had warned last year that it could be forced to shut one of its five factories in Italy.
But Marchionne cautioned about Europe, saying: "The European car market may not have hit bottom."
In a conference call, Marchionne said Fiat would buy all of Chrysler "as soon as I can afford it" because the ties between the two automakers were now "irreversible."
"I see them as one entity," Marchionne said.
Fiat took control of Chrysler in 2009 as the third largest US automaker emerged from a government-financed restructuring under bankruptcy protection.
After winning a 20 percent stake in exchange for sharing its technology and leadership, Fiat has steadily expanded its control by purchasing shares owned by the US government and the United Auto Workers union VEBA retiree health benefits fund.
Fiat currently has a 41.5 percent stake in Chrysler, which earlier on Wednesday announced that its net profit had surged 68 percent in the fourth quarter mainly due to increased US sales.
Total profits for the fourth quarter were $378 million on sales of $17.2 billion, up from $15.1 billion in the year-earlier quarter.
The quarter capped a strong year in which net profit was up more than nine-fold to $1.67 billion on a 19.6 percent gain in sales, to $65.8 billion.