Chrysler reports progress and loss
Monday, November 8, 2010; 6:38 PM
Chrysler Group, one of the two U.S. automakers rescued by the government last year, reported an $84 million third-quarter loss Monday, but executives said the company is moving in the right direction.
The company's loss is down from $172 million in the previous quarter, and Chrysler executives credited the new Jeep Grand Cherokee with drawing more consumers into dealerships.
"The third quarter has been a decent quarter for Chrysler," Sergio Marchionne, Chrysler's chief executive said in a call to analysts. "We're satisfied with the progress that we've made in terms of getting our ducks lined up and in terms of delivering earnings."
Since its near collapse and rescue by the U.S. and Canadian governments, Chrysler has owed $7.4 billion to those treasuries, and the interest on those loans has weighed on the company's profitability.
Last quarter, it earned an operating profit of $239 million on net revenue of $11 billion. But it reported net interest expenses of $308 million.
The company has also struggled to reach the profit margins on its vehicles that have helped its domestic competitor, Ford, surge in profitability.
But Chysler's market share in the United States has grown in recent quarters, from 8 percent a year ago to 9.6 percent this year, and Marchionne said the company is moving toward profitability.
"A year ago, Chrysler Group laid out clear and concise five-year financial goals, and after three consecutive quarters of better than forecasted results, we are not only living up to our commitments, but we are also exceeding our 2010 financial objectives," Marchionne said in a statement.
Accordingly, the company has raised its financial forecasts, saying that it expects its operating profit for 2010 to rise to $700 million.
The automaker has said it could have an initial public stock sale in the second half of 2011. It has promised to repay the government loans by 2014.
Also during the quarter, the automaker announced two significant investment in U.S. plants: An $850 million investment has gone into a factory in Sterling Heights, Mich., creating 900 new jobs, and a $600 million investment was made at the Belvidere, Ill., plant.