Chrysler Narrows Losses, Increases Operating Profit, Ups Forecast
By Michelle Krebs November 8, 2010
Chrysler's third-quarter results released this morning show vast improvement in the automaker's financial performance, prompting Fiat, which now runs Chrysler, to up its forecast for the full year.
Chrysler still lost money on a net basis - $84 million in the third quarter - but narrowed the loss from $172 million in the second quarter. Its operating profit, increasing quarter after quarter, rose to $239 million, a $56 million improvement.
The success of the redesigned 2011 Jeep Grand Cherokee deserves much of the credit for Chrysler's improvement.
As a result of its third-quarter performance, Chrysler upped its full-year forecast. It now forecasts it will turn an operating profit of about $700 million for the year, up from breakeven or slightly better, and will see positive cash flow of $500 million, improved from a forecast of negative $1 billion cash flow.
"A year ago, Chrysler Group laid out clear and concise five-year financial goals, and after 
three consecutive quarters of better than forecasted results, we are not only living up to our commitments but we are also exceeding our 2010 financial objectives," Chrysler CEO Sergio Marchionne, who holds a conference call on financial results later today, said in a statement.
Going forward, Marchionne added, Chrysler's financial success is dependent upon new vehicles.
"In a mere 16 months," Marchionne noted, the company is delivering 16 all-new or refreshed products led by the critically acclaimed all-new 2011 Jeep Grand Cherokee and including the Fiat 500, signaling the return of the Fiat brand to the U.S. and Canada. We are committed to ensuring that every new vehicle this company launches has the same high quality and technological advances as the Jeep Grand Cherokee."
Marchionne said 2010 is just the beginning of building Chrysler "into a vibrant and competitive automaker."
By the Numbers
For the third quarter ended Sept. 30, Chrysler: 
- lost $84 million, improved from the $172 million loss in the second quarter. For the year to date, Chrysler posted net losses of $453 million.
- earned an operating profit of $239 million, an improvement of $56 million from the second quarter. For the year to date, Chrysler earned $565 million in operating profits.
- posted a $937 million profit on an EBIDTA basis (minus interest and taxes), an $82 million improvement. For the year so far, Chrysler has earned nearly $2.6 billion on an EBITDA basis.
- increased net revenues to $11 billion, up 5 percent $10.5 billion in the second quarter and bringing the year-to-date total to $31 billion.
- upped its cash reserves to $8.3 billion, up from $7.8 billion at the end of the second quarter, for a total available liquidity of more than $10.5 billion, which includes a $400 million in Mexican development loans acquired during the quarter and yet-to-be-drawn loans of $2.3 billion from the U.S., Canadian and Ontario governments.
- sold 401,000 vehicles globally in the third quarter, a 1 percent decline from 407,000 sold in the second quarter. Jeep and Ram brands posted gains quarter to quarter.
- boosted U.S. market share to 9.6 percent in the quarter, up from 9.4 percent in the second quarter of 2010 and 8.0 percent in the third quarter of 2009. Market share in Canada, where Chrysler has a number of key manufacturing operations, remained consistent at 12.8 percent.
2010's Revised Forecast
Chrysler's revised forecast for the remainder of 2010 calls for:
- an operating profit of $700 million, up from 0 to $200 million;
- $3.3 billion in profits on an EBITDA basis, up from the predicted $2.5 billion to $2.7 billion;
- positive free cash flow of $500 million, up from a negative $1 billion;
- net revenues of $42 billion, in line with the earlier forecast of $40 billion to $45 billion.
LEAVE A COMMENT