Chrysler Returns to Profit

[rdowns]

Link

DETROIT—Chrysler Group LLC on Monday said rising vehicle sales led to a small net profit for the first quarter, the auto maker's first since exiting bankruptcy almost two years ago.

Chrysler reported $116 million in net income, compared to a loss of $197 million in the first quarter of 2010. Revenue rose 35% to $13.1 billion, as global sales of new cars and trucks increased 18% to 394,000 vehicles.

In the past several quarters, the company, which is now in an alliance with Italy's Fiat SpA, has reported operating profits but red ink on the bottom line, in large part because of heavy interest payments on the $7.5 billion it borrowed from the U.S. and Canadian governments. First-quarter interest payments on those loans totaled $348 million, Chrysler said.

Separately, the auto maker gave the details of a plan to raise financing from a group of banks to pay off its government loans to lower its interest costs and reduce its ties to the two governments. Chrysler said it has secured a six-year term loan of $3.5 billion from a group of banks, as well as a $1.5 billion revolving loan. It also expects to raise $2.5 billion from a debt offering, and $1.3 billion through Fiat's exercise of an option to acquire an additional 16% of Chrysler.

The transaction will take Fiat's stake to 46%. It expects to increase that to 51% by the end of the year.

In 2010, Chrysler upgraded many of its current vehicles in hopes of reviving sales and market share in the U.S. In the first three months of the year, Chrysler's U.S. sales rose 22.5%, lifting its market share to 9.4%.

"Chrysler Group's improved sales and financial performance in the first quarter show that our rejuvenated product lineup is gaining momentum in the marketplace and resonating with customers," Sergio Marchionne, who serves as chief executive of both Chrysler and Fiat, said in a statement Monday.

At the end of the first quarter, Chrysler had $9.9 billion in cash, up from $7.3 billion at the end of December. Gross industrial debt was $13.3 billion slightly higher than $13.1 billion in December.

Chrysler also affirmed its 2011 forecast calling for net income of between $200 million and $500 million with more than $55 billion in revenue.

Free cash flow will be more than $1 billion and the company will report a modified operation profit of more than $2 billion.

On a world-wide basis, the company shipped 485,000 new cars and trucks or 28% more than the first quarter of 2010. U.S. shipments totaled 358,000 compared with 268,000.

Chrysler's net profit means all three Detroit auto makers are once again profitable. Last month, Ford Motor Co. reported first-quarter net income of $2.6 billion. General Motors Co. reports its earnings on Thursday.

While the news is sure to give Chrysler a boost, the auto maker is once again facing rising gas prices in the U.S. which could slow sales. Despite the improvements, Chrysler's vehicles are still dominated by large cars, sport-utility vehicles and pickup trucks. Consumers may continue turning away from those vehicles if gas remains above $4 a gallon.

Moreover, Chrysler's sales increases have mainly come from its Dodge and Jeep brands, while its Chrysler brand continues to struggle. In the first quarter, U.S. sales of Chrysler-brand vehicles fell 9.2%, despite the addition of redesigned models and growth in overall U.S. auto sales.

Chrysler last reported a quarterly profit in the second quarter of 2006, when it was still part of DaimlerChrylser AG. It continued losing money after it was acquired in 2007 by Cerberus Capital Management LP.

 

[GoCubsGo]

Make profit, borrow more to pay off the others, keep profit ... yeah BS. Some of that profit needs to be used towards paying off the government loans before they're able to borrow more (regardless of the source).

 

[Michaelgtrusa]

Good news.

 

[Abstract]

How did they manage to turn a profit? Who's buying their cars, and why?

 

[obeygiant]

How did they manage to turn a profit? Who's buying their cars, and why?

I just got my wife a Town & Country. She loves it. It's a great van.

 

[Don't panic]

Make profit, borrow more to pay off the others, keep profit ... yeah BS. Some of that profit needs to be used towards paying off the government loans before they're able to borrow more (regardless of the source).

that is what they are doing, and they are basically re-financing the rest.
if they can repay the govt and go back to making money, where is the problem?

 

[rdowns]

Make profit, borrow more to pay off the others, keep profit ... yeah BS. Some of that profit needs to be used towards paying off the government loans before they're able to borrow more (regardless of the source).

Um…

In the past several quarters, the company, which is now in an alliance with Italy's Fiat SpA, has reported operating profits but red ink on the bottom line, in large part because of heavy interest payments on the $7.5 billion it borrowed from the U.S. and Canadian governments. First-quarter interest payments on those loans totaled $348 million, Chrysler said.

Separately, the auto maker gave the details of a plan to raise financing from a group of banks to pay off its government loans to lower its interest costs and reduce its ties to the two governments. Chrysler said it has secured a six-year term loan of $3.5 billion from a group of banks, as well as a $1.5 billion revolving loan. It also expects to raise $2.5 billion from a debt offering, and $1.3 billion through Fiat's exercise of an option to acquire an additional 16% of Chrysler.

 

[gkarris]

How did they manage to turn a profit? Who's buying their cars, and why?

Closing dealers and plants and laying off workers...

 

[takao]

Sergio Marchionne sure is _the_ car company manager at the moment ... and not only with chrysler but also with how he turned FIAT around ... the 500 is near the top of many reliability ratings in europe (only beaten by the inpracticle Toyota Aygo in his segment in germany for example)

now let's hope the rebadged chryslers gonna save Lancia

 

[SactoGuy18]

Sergio Marchionne sure is _the_ car company manager at the moment ... and not only with chrysler but also with how he turned FIAT around ... the 500 is near the top of many reliability ratings in europe (only beaten by the inpracticle Toyota Aygo in his segment in germany for example)

now let's hope the rebadged chryslers gonna save Lancia

I would not be surprised that the Ford Motor Company may help Chrysler Group LLC to expand their Toluca, Mexico production line so it could produce both the Fiat 500 and Ford Ka, just like the original Fiat Auto Poland plant. (The Fiat 500 and Ford Ka share the same production platform and both models could come off the same production line.) This will allow Ford to sell the Ka in North America.

I do think that Fiat will get Chrysler to build the next-generation Punto hatchback and Linea saloon for the North American market, though, probably sold under the Dodge label.

 

[leekohler]

How did they manage to turn a profit? Who's buying their cars, and why?

Are you kidding me? I'll take a Challenger and a 300. Thanks.

 

[macquariumguy]

Who's buying their cars, and why?

I can't figure it out either. Ugly, overweight, and bloated describes most of their cars.

 

[samiwas]

Are you kidding me? I'll take a Challenger and a 300. Thanks.

A 300, really? That's the most atrocious car...it just screams "pretentious" to me. Maybe it's because every one I see in Atlanta is blinged out with some rapper wannabe driving it.

 

[Plymouthbreezer]

How did they manage to turn a profit? Who's buying their cars, and why?

Well, obviously not you...

But some people are, and for good reason. The 2011 lineup is really fantastic. Between the Town and Country and the redesigned 300, the vehicles are engaging, well built, and appealing to the demographics they are aiming for.

I don't know how anyone could consider the Challenger bloated / ugly. Or even the 2011 Charger, which has really sweeping, bold lines, and is a lot less "chunky" than the 2005-2010 model.

But hey, I'm a tried and true, loyal-to-the-core Mopar fanatic. Hell, my username is based off a rather dull, mid 90s Plymouth sedan...