Chrysler Earnings Show Quarterly Loss Despite Improved Sales
Much-improved sales helped struggling Chrysler Group report a smaller second-quarter loss, compared to the first quarter, the automaker said Monday. A year after emerging from bankruptcy, the Auburn Hills, Mich.-based company said it lost $172 million in the three months ending June, smaller than the $197 million net loss the automaker reported in the previous quarter.
Chrysler said it sold 407,000 vehicles worldwide in the second quarter, an increase of 22% above the previous quarter. The U.S. and Canada are its primary markets. On an operating-profit basis -- earnings from its core business -- the company made $183 million, up from $143 million in the first quarter.
Second-quarter revenues rose 8.2% to $10.5 billion, compared to $9.7 billion during the first three months of the year. Chrysler didn't report earnings for the second quarter last year. The company said it lost $3.8 billion from June 10, 2009, when it exited bankruptcy, to Dec. 31.
Compared to its domestic rivals, Chrysler's latest financial results come up short. Ford Motor (F) recently posted a second quarter profit of $2.6 billion, and General Motors is expected to report a net gain Thursday.
Chrysler's Achilles' heel remains its products, many of which aren't as fresh or refined as those of its rivals. Last month, the company introduced a new version of its Jeep Grand Cherokee mid-sized SUV, but other updated products won't arrive until later in the year.
Chief Executive Sergio Marchionne expects the company will break even or possibly earn a small profit this year on revenue of $40 billion to $45 billion. Still, the company said it's "highly probable" that it will upgrade current-year earnings guidance when it releases third-quarter results. But it remains unclear when Chrysler will report a net profit.
In a statement, Marchionne said, "The second quarter operating profit confirms that Chrysler Group is on track to achieve its goals, yet an extraordinary amount of work still lies ahead."
Among highlights in the second quarter, Chrysler said it added a second shift at its Jefferson North Assembly plant in Detroit and that an assembly plant in Sterling Heights, Mich., will remain open beyond 2012. The Sterling Heights plant also added a second shift, along with 900 workers.
The company also prevailed in 70% of the cases brought before federally mandated arbitration hearings by dealers facing closure. Chrysler had sought to close 789 of its franchises to save money. About 4% of dealers rejected during bankruptcy won in arbitration, Chrysler said.