The Auburn Hills, MI automaker -- maker of Jeep, Dodge and Chrysler vehicles -- earned $116 million in the quarter, an improvement after losing $197 million in the same period last year. Revenue was up substantially by 35% to $13.1 billion, while sales of vehicles were up 18%.
Cash on hand is a key measure of an automaker's health because of the substantial capital needs of industrial companies. Chrysler said it had $9.9 billion in cash on hand as of March 31, an increase of $2.6 billion in three months, and $13.3 billion in debt.
Chrysler CEO Sergio Marchionne, who also serves as CEO of Italian automaker Fiat, which is allied with Chrysler, has announced the company will shortly refinance its $7.5 billion in outstanding loans with the U.S. and Canadian government with bank debt, paying back taxpayers who bailed out the company years ahead of schedule. Chrysler said it would repay the loans by the end of June by selling $2.5 billion in bonds and borrowing $5 billion at better terms than those dictated with the government loans.
"Chrysler Group's improved sales and financial performance in the first quarter show that our rejuvenated product lineup is gaining momentum in the marketplace and resonating with customers," Marchionne said in a statement. "These results are a testament to the hard work and dedication of our employees, suppliers and dealers, all of whom are helping Chrysler create a new corporate culture built on the quality of our products and processes, and simple, sound management principles."
Chrysler has been crawling back to profitability, but was kept in the red last year by the interest payments on the loans that were critical to its survival in 2009. The company had reported operating profits in each quarter of 2010, but those interest payments, which totaled $1.23 billion for the year, resulted in losses over all. Chrysler lost $652 million last year.
Looking ahead, the company, which is expected to do an initial public offering of stock by mid 2012, said it expects to earn $200 to $500 million for all of this year, meaning it could post additional money-losing quarters this year as well as profitable ones.
G.M., which went through government-led bankruptcy at the same time as Chrysler, earned $4.7 billion in 2010, and will report first quarter earnings later this week. Chrysler, though, was in worse shape than GM, and its new-product pipeline was impacted more adversely by the ownership of private equity firm Cerberus, and then the bankruptcy.
The company's passenger cars, though much improved under Fiat, are still under-performing its rivals, while pickup trucks and SUVs still account for most of Chrysler's sales--78 percent in the first quarter, compared with about 60 percent for GM and Ford. The all-new Jeep Grand Cherokee has been especially well received.
Chrysler is gearing up for a significant 2012 and 2013, a period in which it planned to introduce several new vehicles developed from scratch by Chrysler and Fiat design and engineering staffs working together. Those new vehicles are being built from Fiat engineering platforms that are being adapted for Chrysler vehicles. The automaker in the last few months has been rolling out numerous updated and improved cars and SUVs, but those have been mostly improved carry-over vehicles from when Chrysler was owned by Cerberus Capital Management and German automaker Daimler before that.
Cerberus was stripped of ownership of Chrysler in 2009 when the company hit the financial wall, and needed government help. To protect jobs in the already hard-hit Midwest, the White House Auto Industry Task Force directed funds from the Troubled Asset Relief Program (TARP) funds. Fiat was the only automaker that stepped up with interest in running Chrysler.
The auto industry bailout kept Chrysler, as well as General Motors, from going out of business or being broken up, as well as hundreds of auto suppliers and thousands of auto dealers that would have gone out of business as a result.
By the end of the year, Fiat expects to exercise an option that will give it 51% of Chrysler. Until the government loans are formally paid back, the U.S and Canada own a combined 10.8 percent of Chrysler. Chrysler is now 30-percent owned by Fiat. Fiat will increase that by 16% after the loans are repaid. Chrysler's majority owner is currently a trust fund set up to cover the cost of health care for hourly retirees.