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Chrysler Posts $116 Million Profit as Vehicle Sales Rise

U.S. sales of the Jeep brand gained 34 percent from a year earlier. Photographer: Giuseppe Aresu/Bloomberg
U.S. sales of the Jeep brand gained 34 percent from a year earlier. Photographer: Giuseppe Aresu/Bloomberg

May 2 (Bloomberg) -- Chrysler Group LLC reported first-quarter net income of $116 million, its first since emerging from bankruptcy reorganization in 2009, as U.S. sales of its Dodge and Jeep vehicles increased.

The profit compares with a net loss of $197 million a year earlier, Auburn Hills, Michigan-based Chrysler, which is operated by Fiat SpA, said today in a statement. The average estimate of three analysts surveyed by Bloomberg was for net income of $96 million.

First-quarter net revenue rose 35 percent to $13.1 billion. U.S. sales of the Jeep brand gained 34 percent from a year earlier and Dodge model deliveries increased 28 percent while Chrysler Group spent 12 percent less on sales incentives and discounts, according to researcher Autodata Corp. in Woodcliff Lake, New Jersey.

“Chrysler’s performance in the first quarter is significant,” Warren Browne, a Northville, Michigan-based vice president at consultant AutomotiveCompass LLC, said in an e-mail after the release. “The performance keeps them as a solid Detroit Three player.”

Sergio Marchionne, chief executive officer of both automakers, aims to refinance Chrysler’s government debts, report a net profit of $200 million to $500 million this year and boost its worldwide sales 32 percent to 2 million vehicles. The automaker said last month that first-quarter global deliveries rose 18 percent from a year earlier to 393,879.

Modified Profit

First-quarter modified operating profit, a measure that excludes items such as taxes, interest and pension-related costs, more than tripled to $477 million from $143 million a year earlier, the company said. The improvement was mainly because of higher sales and better pricing and mix, Chrysler said.

Chrysler’s first quarter included the introduction of the redesigned Chrysler 300 full-size sedan, the start of deliveries of the Fiat 500 and a Super Bowl commercial featuring the Chrysler 200 sedan and rap star Eminem.

“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,” Marchionne said in a statement.

‘Promising Future’

The first-quarter results show that Chrysler is “on the right course” for long-term viability, Marchionne said in a memorandum to employees today. “We now have a clear view of a promising future.”

Shawn Morgan, a Chrysler spokeswoman, confirmed the memo.

The company had $9.87 billion in cash on hand at the end of March, an increase of $2.51 billion from the end of December, Chrysler said.

The company has been slow to distribute new vehicles such as the Chrysler 200 and 300 sedans, largely because of efforts to ensure quality, Marchionne said during a conference call with analysts and journalists. U.S. sales of the Chrysler brand fell 9.2 percent during the quarter, according to Autodata.

“We’ve got less than two Chrysler 200s per dealer as of the end of the first quarter,” Marchionne said. “That’s inadequate to try and get traction.”

He said he expects sales to accelerate as distribution increases.

Truck Lineup

Chrysler’s performance has been good given that its lineup relies heavily on pickups and sport-utility vehicles, said Jesse Toprak, an analyst with

The automaker’s average transaction prices rose 1.1 percent to $29,742, according to, a website that tracks auto sales trends. Chrysler increased the portion of its sales from leases in the U.S. by 6.9 percentage points to 16.3 percent, Edmunds said.

Marchionne plans to increase Fiat’s 30 percent ownership in Chrysler to 51 percent this year and has said he aims to sell shares of the U.S. automaker to the public as well.

Chrysler last week announced it would issue new debt to pay off $7.53 billion in U.S. and Canadian government loans this quarter, allowing Fiat to exercise an option to purchase 16 percent of Chrysler Group this quarter.

Chrysler said today that it plans to obtain senior secured credit facilities including an expected $3.5 billion six-year term loan and a $1.5 billion five-year revolving credit facility as well as an expected $2.5 billion in new secured debt securities with eight- and 10-year maturities.

Profit Guidance

While the automaker confirmed its net-income guidance for the year, it said the forecast excludes the effects of refinancing and potential conversion of Chrysler from a limited-liability corporation to a corporation.

Chrysler expects to save $100 million in the second half because of its debt refinancing and have charges of about $500 million associated with paying off the loans early, Chief Financial Officer Richard Palmer said.

Marchionne has said he expects to meet a performance milestone tied to Chrysler assembling a 40 mpg vehicle in the U.S. by the end of the year, triggering the final 5 percent stake and giving Fiat 51 percent ownership.

As soon as Fiat exercises its 16 percent option in Chrysler, the Italian automaker must consolidate the U.S. automaker’s results on its balance sheet, Marchionne said.

“The consolidation of Chrysler will be accretive to the earnings of Fiat going forward,” he said. Fiat is working on the accounting issues now, he added.

“Mergers of Fiat and Chrysler are not on the table -- I’ve been rather clear on this,” Marchionne said. “Whatever discussion that needs to happen on this topic is a longer-dated issue than the ones we’re currently dealing with.”

Fiat rose as much as 33 cents, or 4.6 percent, to 7.54 euros and closed at 7.49 euros in Milan trading. The shares have gained 12 percent this year.

To contact the reporter on this story: Tim Higgins in Southfield, Michigan at

To contact the editor responsible for this story: Jamie Butters at

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