Chrysler posts first post-bankruptcy profit
Chrysler, struggling to repay US and Canadian government bailouts, reported $116 million in net profit for the first quarter, compared with a net loss of $197 million in the year-ago period.
Revenue leaped 35 percent to $13.24 billion as global sales jumped 18 percent jump: 394,000 vehicles were sold, and at higher prices.
First-quarter adjusted operational profit more than tripled from a year ago to $477 million.
The number-three US automaker confirmed its 2011 outlook for profits of $200-500 million and revenue to exceed $55 billion.
But the profit forecast did not include a possible $400 million cost of refinancing its debt to the governments and other potential restructuring costs, the company said.
"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, Chrysler's chief executive and Fiat boss, said in a statement.
Chrysler and General Motors, the biggest US automaker, required government rescues and underwent bankruptcy reorganizations to survive a severe slump in US auto sales during the 2008-2009 financial crisis.
Fiat has been steering the company after taking a 20 percent stake as the US carmaker emerged from bankruptcy in June 2009.
Fiat has raised its stake in Chrysler twice this year, in January to 25 percent, and in April to 30 percent.
In April Fiat took a step toward becoming one of the biggest automakers in the world with a $1.3-billion deal to raise its stake in Chrysler to 46 percent.
The Italian automaker said it expected to increase its stake to 51 percent before the end of 2011.
That would help the US government wind down its eight percent stake in the smallest of the US Big Three automakers.
Fiat and Chrysler combined would have production volume of about four million vehicles a year, which could be increased to six million by 2014, placing the new entity among the world's top automakers.
The Italian automaker has given Chrysler access to much-needed small-car technology and Chrysler offered dealership networks which Fiat lacked, notably in the United States.
Chrysler's US market share rose slightly in the first quarter, to 9.2 percent from 9.1 percent in the 2010 period. The company made stronger progress in clawing back market share in Canada, gaining a full point to 14.7 percent.
Chrysler said last Thursday it would repay bailout loans worth more than $7 billion given by the US and Canadian governments by June by obtaining loans from investors.
At the end of 2010, Chrysler owed $5.8 billion to the US government and $1.7 billion to the Canadian government and the province of Ontario.
"Chrysler deserves a lot of credit. It has accomplished all of the goals laid out by Sergio Marchionne in November 2009 and it has done so with limited resources," said Michelle Krebs, an auto industry analyst at Edmunds.com.
Krebs pointed to broad signs of growing interest in the Chrysler brand, after buyers shied away concerned that the company could fail.
"Challenges lie ahead, including launching a successful IPO and filling its future product line-up especially with much-needed smaller, fuel-efficient vehicles," she said.