Chrysler Group posts profit fall of 65 per cent
30 Apr 2013
Chrysler Group said yesterday that its net income was down 65 per cent in the first quarter, to $166 million, with the automaker spending heavily on preparation for introduction of new products.
According to Chrysler, the smallest of Detroit's three auto companies, revenue was down 6 per cent in the quarter, to $15.4 billion despite an 8 per cent rise in new vehicle sales. The weaker results indicated that Chrysler was still in the process of consolidating its comeback from a government bailout and bankruptcy in 2009.
However, the company's chief executive, Sergio Marchionne, reaffirmed earlier forecasts that Chrysler would earn $2.2 billion for the full year on revenue of $72 billion or higher.
Marchionne, who is also chief executive of Chrysler's parent company, the Italian automaker Fiat, said the company remained on track to achieve its business targets, even as the first-quarter results were affected by an aggressive product-launch schedule.
Fiat, which owns 58.5 per cent of Chrysler, last morning also reported a fall in profit as weak sales in Europe persisted.
According to the Italian parent, its net profit in the first quarter was down to €31 million, an 88-per cent decline from the €262 million euros it earned in the same period in 2012. The company's revenue was down 2 per cent to €19.8 billion.
According to Fiat, minus its profit contributions from Chrysler, it would have lost €41 million in the quarter.
Chrysler said results took a hit from reduced vehicle shipments that resulted from launches of the 2013 Ram heavy-duty pickup and the 2014 Jeep Grand Cherokee, as and preparations for the second-quarter launch of the all-new 2014 Jeep Cherokee. The model changeover work hurt shipments and sales.
The Jeep Liberty SUV was not in production any longer, and its replacement, the Cherokee, was not yet on sale in the first quarter.
On a call with analysts and reporters, Marchionne acknowledged that new-vehicle launches were hardly unusual in the car business.
He said the company remained on track to achieve its business targets and added that the quarter underscored the importance of an unwavering commitment to execute flawless vehicle introductions for the company to reach full potential.
He added, the "task ahead this year is daunting," however, the company was committed to targets that included a minimum shipment increase of 8 per cent and a modified operating profit of $3.8 billion.
Chrysler was the only US automaker to gain market share in 2012, increasing its average transaction price by nearly $1,000 per vehicle as against 2011. This had helped improve profitability at the company.
