DETROIT — Chrysler said on Monday that it narrowed its loss in the second quarter to $172 million and recorded its second consecutive operating profit as sales and revenue increased. þþThe carmaker earned $183 million in operating income, which excludes one-time charges, an improvement of $40 million over the first quarter. The overall loss, primarily attributable to interest payments on Chrysler’s government loans, was $25 million less than in the first quarter and far smaller than its fourth-quarter loss of $2.7 billion. þþRevenue rose 8.2 percent from the first quarter to $10.48 billion. Results in the years before Chrysler’s April 2009 bankruptcy filing are not public. þþChrysler increased its cash reserves by $400 million to $7.8 billion. Net debt was $3.4 billion, including owed $5.7 billion to the American government and $1.2 billion owed to Canada. þþ“The second quarter operating profit confirms that Chrysler Group is on track to achieve its goals, yet an extraordinary amount of work still lies ahead,” Sergio Marchionne, Chrysler’s chief executive, said in a statement. “Customer traffic in our dealerships and confidence in the company’s future continued to grow.” þþChrysler said in the statement that it was “highly probable” that it would increase its guidance for 2010 after reporting its third-quarter results. Its current financial goals for 2010 include an operating profit of up to $200 million and revenue of $40 billion to $45 billion. þþMr. Marchionne called 2010 “a year of transition and stabilization” for Chrysler, which is introducing fewer new models this year than most of its biggest rivals because its previous owner, Cerberus Capital Management, invested little in product development. þþA little more than a year after its bankruptcy, Chrysler has shifted from shedding thousands of jobs and closing plants to hiring workers and increasing production. It recently said a suburban Detroit assembly plant scheduled to close in 2012 would remain open. þþChrysler’s sales in the United States are up 10.8 percent this year from the first seven months of 2009, but only because it has increased deliveries to governments, rental-car companies and other businesses. Such sales are less profitable than purchases by individual customers, which have declined this year for Chrysler while increasing for most other automakers. þþMr. Marchionne told reporters during President Obama’s July 30 visit to a Chrysler plant in Detroit that Chrysler intended to rely less on those bulk sales as its vehicle lineup improves. Still, he said, Chrysler already would be profitable if not for the interest it owes. Chrysler paid $591 million in interest in the first half of 2010. þþChrysler is the only one of the three Detroit automakers still reporting net losses. Mr. Obama, who used his recent visit to proclaim his administration’s aid to the industry a success, noted that General Motors, the Ford Motor Company and Chrysler are simultaneously reporting operating profits this year for the first time since 2004. þþUnlike G.M., which earlier this year paid off the portion of its loans that remained on its balance sheet as debt, Chrysler is not in a hurry to repay the government, Mr. Marchionne said. He has previously said the company would pay its government debt by 2014. þþ“We have enough cash to pay it all off, but you can’t run a business without cash,” Mr. Marchionne said on July 30. þþChrysler is also not rushing as quickly as G.M. to have a public stock offering, which would allow the government and other shareholders, including a trust fund for United Automobile Workers union retirees, to sell off their stakes. The trust fund is Chrysler’s majority owner, and the Treasury Department holds 8 percent. The Italian automaker Fiat, which Mr. Marchionne also serves as chief executive, owns 20 percent but has operational control. þþG.M. said last week that it is preparing to file the registration form for an initial public offering, but Mr. Marchionne said Chrysler does not plan to go public until at least 2011. þþ“I’m waiting for G.M. to go first,” he said. “They’re bigger.” þþG.M., which earned a first-quarter profit of $865 million, plans to release its second-quarter results later this week. Ford, which did not file for bankruptcy protection or take a bailout loan, earned $4.7 billion in the first half of 2010. þ
Source: NY Times
