Chrysler Reports a Profit Drop of 65%

DETROIT – Chrysler Group said Monday that its net income fell 65 percent in the first quarter, to $166 million, as the automaker spent heavily to prepare for new product introductions.

Chrysler, the smallest of Detroit’s three auto companies, said revenue dropped 6 percent in the quarter, to $15.4 billion despite an 8 percent increase in new vehicle sales. The weaker results indicated that Chrysler is still solidifying its comeback from a government bailout and bankruptcy in 2009.

But the company’s chief executive, Sergio Marchionne, reaffirmed earlier forecasts that Chrysler would earn $2.2 billion for the full year on revenue of $72 billion or higher.

“We remain on track to achieve our business targets, even as the first-quarter results were affected by an aggressive product-launch schedule,” said Mr. Marchionne, who is also chief executive of Chrysler’s parent company, the Italian automaker Fiat.

Fiat, which owns 58.5 percent of Chrysler, is scheduled to report its first-quarter results later today.

The first-quarter results mark Chrysler’s seventh consecutive profitable quarter. The company reported that it sold 563,000 vehicles worldwide during the three-month period, an 8 percent increase from the same period a year ago. Most of the additional sales came in the United States, where Chrysler said its market share improved slightly to 11.4 percent, up from 11.2 percent in the same period in 2012.

Chrysler’s turnaround since the recession has been built on reviving core products, like Jeep sport utility vehicles and Ram pickups, as well as bringing out new models like the Dodge Dart compact car. Competition is increasing among all automakers in the American market, which is growing while demand is sliding in Europe and other important international markets.

Chrysler said its lower profits in the quarter reflect costs associated with the introductions of new versions of its Jeep Grand Cherokee S.U.V. and heavy-duty Ram pickup, and second-quarter production of the new Jeep Cherokee.

The company said its cash reserves improved to $11.9 billion during the quarter, up from $11.3 billion a year ago. Its overall debt was $12.5 billion, about the same as it reported in the first quarter of 2012.

Article source: http://www.nytimes.com/2013/04/30/business/chrysler-reports-a-profit-drop-of-65.html?partner=rss&emc=rss