Car-maker and industrial group Fiat has reported its first loss since 1993, and warned that the year ahead promises to be difficult.

Italy's biggest private industrial group made a net loss of 791m euros (�485m; $686m).

The loss was mainly down to weak demand for its cars, the group's core business.

Fiat Auto recently announced it was cutting 6,000 jobs outside Italy over the next two years as part of a big shake-up of its business.

Factory closures

This followed the resignation of Roberto Testore, who ran the auto division for the last six years as it racked up mounting losses.

Fiat Auto accounts for 46% of the group's sales, but only contributed 5.1% of Fiat's overall operating profits in 2000.

Fiat said it will either close or restructure 18 of its factories over the next two years, two of them in Italy and 16 abroad.

Fiat said in a statement on Thursday it saw a contraction in auto market demand and that "volatility and uncertainty" made it impossible to make forecasts about the group's future performance.

"While 2002 will be a difficult year it prevents us for the moment from making any reliable forecasts about the probable economic trend for the whole year," Fiat said.

"But the group remains committed to aim for an operating result significantly better than in 2001," Fiat added.