CEO: Chrysler on Pace to Hit 2010 Goals
AUBURN HLLS, Mich. — Though controlling stakeholder Fiat is slated to release its five-year plan later today, early details about Chrysler's financial results have already come out.
The automaker is still on track to meet its goals for 2010, which include at least breaking even for the year, chief executive officer Sergio Marchionne said as the company released its first quarter results.
The company cut down its quarterly net loss to $197 million, a $2.494 billion improvement from the prior quarter.
Chrysler recorded operating profit of $143 million, up $410 million from the fourth quarter of 2009. Officials said this was pushed up by "continued price discipline" as well as some mix improvement spurred by the all-new Ram Heavy Duty pickup's launch.
"This positive operating result in the first quarter is a concrete indication to our customers, dealers and suppliers that the 2010 targets we have set for ourselves are achievable," Marchionne said.
"We are also generating cash to finance the investments being made in our product portfolio and brand repositioning," he added.
Net revenues were $9.687 billion, compared with $9.434 billion in the prior quarter. Chrysler sold 334,000 units throughout the world in the first quarter, up from 318,000 in the fourth quarter of 2009.
Officials credited this upswing largely to Chrysler's U.S. market share climbing from 8.1 percent to 9.1 percent sequentially, as well as the gains in its Canadian market share from 11.6 percent to 13.7 percent.
Chrysler said its effort to reposition the brand and investment in marketing helped its dealers achieve greater showroom traffic. This helped fuel a "steady" month-over-month improvement in retail sales throughout the quarter.
"There has already been an uptick in customer traffic in our dealerships in Q1 and we are confident that Chrysler sales will continue to increase as we launch new products in the second quarter, beginning with the all-new 2011 Jeep Grand Cherokee," Marchionne pointed out.
"Moreover, later this year, Chrysler will launch 16 all-new or refreshed products including the all-new Chrysler 300, Dodge Charger, E-CUV, the iconic Fiat 500, and the Sebring replacement," he added.
The company reported modified EBITDA of $787 million, industrial net debt of $3.825 billion as of March 31, and cash of $7.367 billion.
And with $2.4 billion that Chrysler can still draw as part of its loan agreements with the U.S. Treasury and Export Development Canada, total liquidity stands at $9.8 billion.
Looking forward, Chrysler said it is "on track to achieve" the following goals for 2010:
—Net revenues of $40-45 billion
—Operating profit of $0.0-0.2 billion
—Modified EBITDA of $2.5-2.7 billion
—Negative free cash flow of $1 billion
Moving on, the company also reported audited results of its financial performance for the period between June 10 and Dec. 31, which are the first financial results released since Chrysler Group came out of bankruptcy and began operating last spring.
For the period, Chrysler had a net loss of $3.785 billion. Excluding the non-cash charge of $2.051 billion related to the UAW Retiree Medical Benefits Trust, it was a loss of $1.734 billion.
The operating loss was $895 million, $267 million of which came in the fourth quarter.
Chrysler's net revenues for the period totaled $17.71 billion, generating more than half of it ($9.434 billion) in the fourth quarter.
Modified EBITDA was $538 million, and the company had cash of $5.877 billion at the end of the period.
"The steady progression of our financial results from June through December 2009 shows that Chrysler is on track to meet the ambitious, yet achievable goals announced in November," Marchionne suggested.
"As a result of improving trading margins, operational efficiencies and rigorous cost discipline, we continued to strengthen our cash position through 2009," he added.