Automaker Chrysler Posts First Profit Since 1997
Automaker Chrysler, which only three years ago received a $12.5 billion government bailout, last year posted its first profit since 1997.
The Auburn Hill, Mich.-based company, which is now majority owned by Italy's Fiat SpA, said today that it earned $183 million last year vs. a loss of $652 million in 2010.
"We're pleased with the results. It's been an exceptional year for Chrysler," Fiat-Chrysler CEO Sergio Marchionne said during a Wednesday morning conference call. "We've delivered on everything we told you."
Fiat owns 58.5 percent of Chrysler. The rest is controlled by a trust run by the United Auto Workers.
The Associated Press reports:
"Last year's profit would have been higher — $734 million — if the company hadn't refinanced $7.6 billion in loans granted by the U.S. and Canadian governments. In the second quarter, the company took a $551 million accounting loss because of the refinancing. But the refinancing in May at far lower rates helped save Chrysler about $100 million in interest expenses last year, and is expected to save $300 million during a full year."
Fourth quarter net income was $225 million, up from a loss of $199 million the same quarter a year earlier. Net revenue for the year was $55 billion, up 31 percent from a year ago; fourth quarter net revenue increased 41 percent to $15.1 billion. The improved results came on the back of better sales, especially those of the Jeep Grand Cherokee SUV. It's U.S. sales were up 26 percent.
The AP adds:
"Just three years ago Chrysler was close to running out of cash and heading for the auction house. But a government-funded bankruptcy cut debt and expenses, and Chrysler spent last year rolling out 16 new or revamped models to boost sales. Now the company is expanding into small cars and adding jobs."
Chrysler's new vehicles for this year and next include a revamped Ram 1500 pickup, a new Viper sports car and an all-electric Fiat 500. Chrysler said it expects to make about $1.5 billion in 2012 and increase revenue 18 percent.
The results boost President Obama's stand that bailing out the automakers GM and Chrysler two years ago was the right thing for the economy. Obama has been touting the companies' turnaround ahead of the November presidential elections.