Based on the 2011 financial performance, Sergio Marchionne believes Chrysler’s “house is in good order,” as the automaker turned a net loss of more than a half billion in 2010 into a profitable year.

The chairman and chief executive officer declared Wednesday that Chrysler generated preliminary net income of $183 million for the full year, a significant turnaround from a net loss of $652 million in 2010.

Marchionne pointed out that income level exceeded the objective set in November 2009 as Chrysler began its journey out a bankruptcy with an alliance with Fiat.

Chrysler indicated its full-year net income included a $551 million loss on extinguishment of debt recognized in the second quarter when the company repaid its outstanding obligations to the U.S. Treasury and Canadian governments in full, with interest, six years early.

Excluding the charge, OEM officials calculated adjusted net income for the full year was $734 million, exceeding the company’s 2011 guidance and further delivering on the goals established two years ago.

For the fourth quarter, Chrysler said net income was $225 million, up from a loss of $199 million a year earlier as the company continues to increase sales of its successful new and significantly refreshed vehicles.

As of January, Chrysler reiterated that it has achieved all three performance events set forth in its amended and restated operating agreement. As a result of achieving these events, and in combination with other transactions, Fiat now owns 58.5 percent of the membership interests in Chrysler.

“The house is in good order. We are proud of the work we’ve done,” Marchionne told investors and the media Wednesday.

“Now we greet a new year of high expectations with our heads down, forging ahead and focused on executing the goals we’ve set for ourselves as a company,” he continued.

Chrysler States 2012 Guidance

As much as analysts and reporters wanted to know how Chrysler performed in 2011, they were equally intrigued during a conference call about what the OEM might do this year.

Marchionne indicated the targets for 2012 are as follows:

—Net revenue of about $65 billion
—Modified operating profit of at least $3.0 billion
—Net income of about $1.5 billion
—Free cash flow of at least $1 billion

“I think it’s been an exceptional year for Chrysler in terms of its own achievements and ambitions. We have established a very strong base on which to enter into 2012,” Marchionne stated.

“We’re looking at 2012 with some degree of optimism,” he continued. “I had a discussion with our board (Tuesday) about this issue. It is clear that for us 2012 will be a transition year in the sense that we are finalizing a number of costs associated with a significant raft of product introductions and rejuvenations in 2013.

“The real story is going to unfold in 2013 at it will start at the Detroit auto show a year from now,” Marchionne projected. “That’s when I think you’ll be able to see all of the work that has been applied by our people in terms of redeveloping a product lineup that allows us to compete internationally.

“It’s not going to be a walk in the park in 2012, but I think we’ve got all of the elements in place,” he added.

At least in the U.S., Chrysler got off to a solid start.

Along with all of the 2011 discussion, Chrysler reported its January sales figures Wednesday, enjoying the best year-opening month since 2008.

Chrysler indicated its January U.S. sales came in at 101,149 units, a 44-percent increase compared with the same month last year and the group’s best January sales performance since 2008.

The automaker highlighted that it began the new year with its 22nd-consecutive month of year-over-year sales gains and eighth-consecutive month of sales increases of at least 20 percent. The Chrysler, Jeep, Dodge, and Ram Truck brands each posted sales gains in January, led by the Chrysler brand’s 81-percent increase.

Chrysler pointed out it has beaten the industry average sales increase in the last 11 months.

“We started the new year with a bang by growing sales 44 percent,” said Reid Bigland, president and CEO of the Dodge brand and head of U.S. Sales.

“In January we continued building on the sales momentum that we generated during 2011 with our 16 all-new or significantly-refreshed products,” Bigland added.

Industry Reacts to Chrysler’s Performance

Chrysler’s 2011 performance and its start to the new year drew diverse commentary from industry and Wall Street analysts.

Alec Gutierrez, senior market analyst of automotive insights at Kelley Blue Book, called Chrysler’s fourth-quarter and full-year financial data “remarkable.”

Gutierrez continued with, “This truly marks the re-emergence of Chrysler as a legitimate contender in a very competitive market. Chrysler improved sales in the U.S. by 28 percent in 2011, significantly outpacing the 10 percent improvement in overall industry sales.  The Jeep brand was a big winner for Chrysler both domestically and globally, while the 200, Durango and Ram Pickup also heavily contributed to Chrysler’s turnaround.”

The KBB analyst then explained his take on how Chrysler is rebounding. 

“Chrysler can attribute their strong performance in 2011 to the strong redesigns and introductions that have arrived under the stewardship of Fiat, something that was sorely lacking while Cerberus was in control of the company,” Gutierrez explained.

“Under the direction of Cerberus, the company primarily focused on cost cutting, and as a result, new product introductions were practically non-existent,” he continued. “This led Chrysler to lose traction as the rest of the industry forged ahead through the financial turmoil that began in 2008, culminating into Chrysler’s bankruptcy and the introduction of Fiat to lead the company into the future.”

Gutierrez moved on to what he thinks the OEM might do this year.

“After a strong 2011, we can see that Chrysler’s future looks bright,” he responded. “In fact, Chrysler already posted very strong numbers for January 2012, reporting a 44 percent year-over-year increase in sales; their 22nd consecutive monthly improvement.

“Although Chrysler has been consistently posting sales gains of 20 percent or more during the past several months, we believe that their momentum will likely slow after March,” Gutierrez estimated. “Sales of the Chrysler 200 and Dodge Durango, key contributors to the brands sales growth, didn’t begin to accelerate until March 2011, making year-over-year comparisons look strong for the brand.

“Chrysler’s sales growth should begin to settle in the next few months, but we could see a surge later in the year once the Dodge Dart begins to hit showrooms,” he went on to project. “Chrysler has not had a competitive offering in the compact segment since the Dodge Neon and with the expectation for continued strong sales growth for the segment, the Dodge Dart can’t arrive soon enough.

“Chrysler appears to be on solid footing for the time being, but they will have to continue to introduce new and exciting products in the years ahead to remain above water in today’s ultra-competitive sales environment,” Gutierrez added.

Meanwhile, analysts who keep closer tabs on the investment community are intrigued by what Chrysler is doing.

“Marchionne aims to aggressively capitalize on the spectacular recovery of the U.S. car market,” Wolfram Mrowetz, chairman of investment firm Alisei SIM in Milan, Italy, told Bloomberg.

Shared in the same report, Stuart Pearson, a Morgan Stanley analyst in London wrote a note to investors on Jan. 24, stating, “Net debt is a key concern. The deep value within Fiat-Chrysler has always been in the terminal value of a merged and restructured organization. Unfortunately, 2012 is likely to see a step backwards from this goal if cash concerns slow essential investment.”

Other 2011 Performance Details

Beyond the income figures, Chrysler also shared a host of other readings from its full-year financial report.

The automaker tabulated that its 2011 net revenue totaled $55.0 billion, a 31-percent increase from 2010. In the fourth quarter, the company’s net revenue was $15.1 billion, up 41 percent from the prior year.

The company reported a full-year modified operating profit of $2.0 billion, more than 2.5 times the prior year’s level. Executives explained the increase resulted from higher sales volume and improved pricing and mix, partially offset by increased advertising and industrial costs.

Chrysler added its modified operating profit for the fourth quarter was $508 million, or 3.4 percent of net revenue, up from $198 million, or 1.8 percent of net revenue, in the fourth quarter  of 2010.

The automaker’s modified EBITDA was $4.8 billion for the full year or 8.6 percent of net revenue, an increase of 37 percent versus the prior year. Chrysler said its fourth quarter modified EBITDA increased 33 percent to $1.2 billion.

What the OEM calculated as interest expense for the full year totaled $1.2 billion, including $170 million of non-cash interest accretion, versus $1.3 billion in 2010 including non-cash interest accretion of $229 million. Its fourth quarter interest expense was $280 million, including non-cash interest accretion of $32 million. This compares with $336 million of interest expense, including non-cash interest accretion of $57 million in the fourth quarter of 2010.

As of Dec. 31, Chrysler counted its cash on hand was $9.6 billion compared with $9.5 billion as of Sept, 30 and $7.3 billion as of the close of 2010. The company’s total available liquidity came in at $10.9 billion, including $1.3 billion available under a revolving credit facility.

Elsewhere on its balance sheet, Chrysler noted its gross industrial debt as of the close of 2011 totaled $12.5 billion, slightly higher than the $12.3 billion at Sept. 30, and lower than the $13.1 billion at end of 2010.

Finally looking at worldwide vehicle sales, Chrysler said it moved 1,855,000 units for the full year, up 22 percent from 1,516,000 vehicles in 2010. The company attributed the gain primarily to a 43-percent increase in U.S. retail sales.

“The improvement reflects increased consumer confidence in our new and significantly refreshed products,” OEM officials reiterated.

Chrysler determined its U.S. market share increased to 10.5 percent for the year from 9.2 percent in 2010. Its fourth quarter U.S. market share was 10.8 percent, up 2.0 percentage points from the fourth quarter a year earlier.

And Chrysler mentioned its worldwide vehicle shipments for full year and fourth quarter 2011 were 2,011,000 and 543,000, respectively, an increase of 26 percent and 42 percent compared with the full year and fourth quarter 2010, respectively.