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Chrysler
Group LLC today issued its financial results for first
quarter of the year reporting that revenues increased to
$9,687 million representing a 3 percent increase over
the prior quarter while net losses dropped to $197
million. Operating Profit came in at $143 million.
Sergio Marchionne, Chief Executive Officer of Chrysler
Group, who is leading a Fiat Group investor day in Turin
today, stated, “This positive operating result in the
first quarter is a concrete indication to our customers,
dealers and suppliers that the 2010 targets we have set
for ourselves are achievable. We are also generating
cash to finance the investments being made in our
product portfolio and brand repositioning. There has
already been an uptick in customer traffic in our
dealerships in Q1 and we are confident that Chrysler
sales will continue to increase as we launch new
products in the second quarter, beginning with the
all-new 2011 Jeep Grand Cherokee. Moreover, later this
year, Chrysler will launch 16 all-new or refreshed
products including the all-new Chrysler 300, Dodge
Charger, E-CUV, the iconic Fiat 500, and the Sebring
replacement.”
The Operating Profit improvement of $410 million,
compared to Q4 2009, was driven by continued price
discipline on all products, claims Chrysler in a written
statement, and some mix improvement due to the launch of
the all-new Ram Heavy Duty pickup. On the cost side
there were improved industrial efficiencies, including
acceleration in the benefits from the World Class
Manufacturing implementation, a more stable supplier
environment and strict cost discipline on all
discretionary spending.
Modified Earnings Before Interest, Taxes, Depreciation
and Amortization (Modified EBITDA) were $787 million, or
8.1 percent of Net Revenue. Net Interest Expense in Q1
2010 was $295 million, including a non-cash interest
accretion of $48 million. As a result, the Net Loss in
Q1 2010 was reduced to $197 million. Industrial Net Debt
at March 31, 2010, was $3,825 million including the
carrying value of the UAW Retiree Medical Benefits Trust
(VEBA) note of $3,863 million, which was reclassified
from OPEB liabilities to financial liabilities due to
the VEBA settlement which occurred on January 1, 2010.
Cash was $7,367 million compared to $5,877 million at
the end of 2009. An additional $2.4 billion remains
available to be drawn under Chrysler’s U.S. Treasury
(UST) and Export Development Canada (EDC) loan
agreements, bringing total available liquidity to $9.8
billion.
Worldwide vehicle sales were 334,000 units for Q1 2010,
compared to 318,000 in Q4 2009. Improved sales were
driven by the Company’s U.S. market share which
increased to 9.1 percent, from 8.1 percent in Q4 2009,
and Canadian market share which improved to 13.7 percent
compared to 11.6 percent in Q4 2009. Through the
quarter, retail sales showed steady growth on a
month-over-month basis, as the brand repositioning
efforts and investments in marketing campaigns started
to drive improved customer traffic into dealership
showrooms.
The Company expects the upward trend of sales to
continue in the second quarter driven by the all-new Ram
Heavy Duty truck, certain product renewals, and
increased consumer confidence in the Company. Worldwide
vehicle shipments in Q1 were 380,000, which included
U.S. vehicle shipments of 268,000, both figures
representing an increase of 3 percent versus Q4 2009. In
anticipation of a seasonally stronger selling season and
increased confidence from Chrysler’s dealer body and
consumers, U.S. inventory was increased from 179,000
vehicles at year-end to 208,000 vehicles on March 31,
2010. Days supply remained flat at 58 days, ensuring
that Chrysler dealers will have the right mix of
products to meet consumer demand going into the second
quarter, while maintaining strict inventory discipline.
Significant Events
On January 1, 2010, Chrysler Group completed the
transfer of the VEBA assets and related benefit
obligations to the UAW Retiree Medical Benefits Trust,
in accordance with the VEBA settlement agreement. In
March 2010, Chrysler celebrated the production launch of
the Pentastar V-6 engine at the Company’s all-new
Trenton, Mich. facility. The Pentastar engine is a
cornerstone of the Company’s efforts to establish a
sound business model with strong, brand-focused,
world-class products. The engine will ultimately replace
seven current Chrysler V-6 engines and utilize advanced
technologies from Fiat such as Multiair,
direct-injection and turbocharging. The Trenton South
Engine Plant was awarded a LEED (Leadership in Energy
and Environmental Design) Gold Green Building System
certification for meeting the highest environmental
standards. This Chrysler facility is one of only four
auto manufacturing facilities to receive a LEED rating
of any kind and the only engine manufacturing facility
in the world to achieve the honor.
In March 2010, Chrysler announced its plans to engineer
and produce a pure electric vehicle using the Fiat 500
platform. Shown at the 2010 North American International
Auto Show in Detroit, Michigan, the Fiat 500EV
demonstrates the immediate benefits of the alliance
between Chrysler and the Fiat Group, as well as the
speed at which the two companies can work together on
advanced vehicle programs. Chrysler is the vehicle
electrification center of competence for both Chrysler
and Fiat Group.
Chrysler and Fiat Group Automobiles (FGA), the passenger
cars and light commercial vehicles arm of the Fiat
Group, prepared to implement a new distribution model
beginning in April 2010, which enables the integration
of the operations of the Company’s European Union NSC’s
into FGA’s distribution organization.
2010 Outlook
Chrysler is on track to achieve its targets for the
year. These targets, announced on November 4, 2009, are
as follows: Net Revenues of $40-45 billion Operating
Profit of $0.0-0.2 billion Modified EBITDA of $2.5-2.7
billion Negative Free Cash Flow of $1.0 billion Chrysler
will be hosting an analyst conference call on May 10,
2010, to discuss Q1 performance.
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