Chrysler Corp. will earn a profit in 1982, ending five consecutive years of devastating business losses, Chrysler Chairman Lee A. Iacocca said today.
"We expect to have a huge operating profit for the year," Iacocca told reporters here after addressing the company's 57th annual stockholders meeting.
In his upbeat address to 500 stockholders, he declared that Chrysler, which once was near bankruptcy, is "over the hump" and is well on its way toward becoming "a new, strong company" capable of "sustained growth in the car and truck market."
Chrysler reported a profit of nearly $150 million for the first quarter of 1982 compared with a loss of $289.3 million over the same period last year.
Chrysler's first-quarter profits this year largely resulted from a nonrecurring gain of $239 million from the sale of Chrysler Defense Inc. But Iacocca said Chrysler's aggressive cost-cutting program, which has lowered the number of cars the company needs to sell to break even, and its continuing sales growth will move the company into profitability for the second quarter as well as for the rest of the year.
Chrysler sold 61,603 cars last May, a 5 percent increase over the 58,791 cars sold in May 1981. The company's increase in truck sales was even more dramatic, with 21,333 sold last month, a 20 percent increase over the 16,541 trucks sold during the same period last year.
Chrysler has not posted an annual profit since 1977, when it finished the year with a net gain of $163.2 million.
In 1979 the company was saved from bankruptcy when Congress authorized $1.5 billion in federal loan guarantees, contingent upon other financial sacrifices from Chrysler's unionized workers, its suppliers and its bankers.
Chrysler drew down $1.2 billion of in guaranteed loans, which Iacocca today said the company will repay by 1985. Since 1979, through cost-cutting, the sales of properties and equipment, and what one Chrysler official today called "a more judicious handling of money," Chrysler has accumulated $900 million in cash and marketable securities. "That is the most cash we've had on hand in the history of the company," Iacocca said.
Partly because of that financial cushion, Chrysler will not have to borrow the remaining $300 million in available federal loan guarantees, Iacocca said.
"The remarkable thing about our story is not that we succeeded, but that we are making everyone whole again. The loans will be paid off. The bankers will come out a whole lot better than they thought they would," Iacocca said, although the banks made concessions on their nonguaranteed loans to Chrysler.
According to Chrysler's 1981 annual report, the company's domestic bankers already have some reason for confidence. Chrysler has retired $1.3 million in domestic bank notes, wiping out its total indebtedness to U.S. banks, the report said.
Now Chrysler must position itself to become "the best, if not the biggest," domestic automaker, Iacocca said.
He said the company will try to reach that goal by going after "those unique segments of the market where others failed to compete."
But auto industry analysts, while giving " Chrysler credit for pulling itself up from the financial depths, say the company still has a distance to go before reaching firm ground.
"Chrysler's position clearly is improving," said analyst David Eisenberg of Sanford C. Bernstein & Co. Inc. of New York. But Eisenberg said that Chrysler's attempt to expand its share of the domestic auto industry--now 10 percent--"is likely to be difficult" as General Motors Corp. and Ford Motor Co. gear up to take a portion of the small specialty and luxury car market that Chrysler has been riding to solvency.