Chrysler Lowers 2013 Profit Target as Income Rises
Chrysler Group LLC lowered its target for full-year earnings, even after second-quarter profit climbed 16 percent on higher demand for the Jeep Grand Cherokee and Ram pickups.
Net income rose to $507 million from $436 million a year earlier, the Auburn Hills, Michigan-based automaker said in a statement today. Sales advanced 7.1 percent to $18 billion. Fiat SpA (F), Chrysler’s majority owner, separately today reported second-quarter profit that was better than analysts expected on reduced European spending and the increased Ram sales.
Sergio Marchionne, chief executive officer of both companies, is relying on Chrysler and its 39 consecutive monthly U.S. sales gains, to offset losses at Fiat’s mass-market brands in Europe. Automakers may sell 15.4 million cars and light trucks in the U.S. this year, the average of 18 analyst estimates and the most since 2007, as the economy follows the auto industry’s rebound.
“The timing of product launches and capacity increases causes this year’s performance to be biased to the second half,” Marchionne said in the statement. “A continued aggressive drive for excellence and flawless execution will be essential to attain the targets we’ve set for ourselves.”
Chrysler forecast operating profit of $3.3 billion to $3.8 billion, compared with a previous target of about $3.8 billion. Operating profit was $2.9 billion last year. The company predicted deliveries of about 2.6 million vehicles, compared with a range of 2.6 million to 2.7 million.
Fiat’s trading profit, or earnings before interest, taxes and one-time items, increased 8.7 percent to 1.03 billion euros ($1.37 billion) from 947 million euros a year earlier, compared with 931 million euros, the average of four analyst estimates compiled by Bloomberg. Sales rose 3.7 percent to 22.3 billion euros.
Chrysler’s deliveries in its home market gained 8.9 percent in the first half of the year to 908,332 cars and light trucks, helped by a 23 percent gain for Ram, 7.6 percent for Grand Cherokee and deliveries for the new Dodge Dart.
Marchionne wants to buy the 41.5 percent of Chrysler Fiat doesn’t own and forge a global manufacturer able to challenge General Motors Co. (GM) and Volkswagen AG. (VOW) Turin, Italy-based Fiat rescued Chrysler through a government-brokered alliance in 2009. Marchionne obtained control of Chrysler without paying cash by pledging Fiat’s vehicles, technology and managerial expertise.
Since then, Chrysler has emerged as the financial power of the Fiat-Chrysler alliance. Without Chrysler, Fiat would have reported a loss for 2012.
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