Chrysler Posts 1Q Loss, Begins Shipping 200 Midsize Sedan
DETROIT -- Chrysler Group expects increased vehicle shipments linked to the new Chrysler 200 midsize sedan won't have a great effect on earnings until the third quarter, its chief financial officer said Monday.
Shipments of the Chrysler 200 began a week ago but it will take time for the pipeline to fill, said CFO Richard Palmer as he discussed Chrysler's first-quarter earnings with analysts.
Sergio Marchionne, chief executive officer of Italian parent Fiat SpA as well as Chrysler, didn't participate in the analysts' conference call after Chrysler reported a $690 million loss in the first quarter.
Chrysler, the No. 3 U.S. automaker, said the loss was due to charges related to the merger of the two companies.
Chrysler took a $504 million non-cash charge on payments to retire a note linked to a union health care trust that was the company's minority owner until January and a $672 million charge for payments to the United Auto Workers retiree health care trust in the United States.
Excluding the items, Chrysler posted a profit of $486 million, up from $166 million a year earlier.
In January, Fiat bought the remaining shares owned by the trust and became the sole owner of Chrysler. The newly merged company, Fiat Chrysler Automobiles, is expected to be listed on the New York Stock Exchange in the fourth quarter.
The redesigned Chrysler 200 is built at a suburban Detroit plant that was slated for closure in 2009 but was recently upgraded at a cost of $1 billion. Critics have said it is a vast improvement over the outgoing Chrysler 200, whose sales were less than one-third of the midsize sedan leader, Toyota Motor's (TM) Camry last year.
"About a week ago, we started shipping," said Palmer. "So, that won't really be in full force until the third quarter," said Palmer.
%VIRTUAL-article-sponsoredlinks%Companies log revenue when vehicles are shipped to dealers. Production of the new sedan will take several months to ramp up to full capacity.
The success of Chrysler 200 sales is key to the Chrysler brand reaching an ambitious goal of selling 800,000 vehicles in North America by 2018, from 350,000 last year. The goal was announced as part of a five-year Fiat Chrysler plan issued Tuesday.
Chrysler Group maintained a 2014 forecast for earnings of between $2.3 billion and $2.5 billion, excluding special items, on net revenue of about $80 billion.
Last Tuesday, Fiat reported a first-quarter net loss of 319 million euros ($444 million), due to one-time items related to its deal to acquire Chrysler.
Fiat shares, which fell about 13 percent last week, dropped almost 1 percent to 7.46 euros in trading Monday in Milan.
Fiat shares are up 25.5 percent since Marchionne announced the deal to fully own Chrysler at the start of the year.