DETROIT (Nov. 8, 2010) — Chrysler Group L.L.C. posted an operating profit of $239 million in the third quarter and raised its outlook for the balance of the year in anticipation of stronger sales and improved operating performance.
The results, released today, marked the auto maker's third straight operating profit. Chrysler's third-quarter net loss was $84 million, down from $172 million in the second quarter. It was Chrysler's smallest quarterly net loss since emerging from bankruptcy 17 months ago.
Revenues rose 5.2 percent to $11 billion during the July-September period.
Chrysler said it benefited from improved product mix and rising unit sales while being hurt by higher costs tied to seasonal plant changeovers.
The auto maker is in the midst of launching 16 new or refreshed products over a 16-month period.
Last quarter's $239 million operating profit topped the $172 million average estimate of four analysts surveyed by Bloomberg.
The company now expects to post an operating profit of $700 million for all of 2010, up from a previous forecast of as much as $200 million. Revenues for all of 2010 are expected to total $42 billion, within the range of $40 billion to $45 billion forecast a year ago.
In addition, Chrysler now expects to generate $500 million in positive cash flow this year, compared with negative cash flow of $1 billion previously forecast.
“We are not only living up to our commitments, but we are exceeding our 2010 financial objectives,” Chrysler CEO Sergio Marchionne said in a statement. “Our 2010 accomplishments are just the beginning of building Chrysler into a vibrant and competitive auto maker.”
Chrysler has posted $453 million in net losses on revenues of $31 billion during the first three quarters of the year. Most of the net loss is a result of interest expenses—$899 million through September—largely on the company's U.S. rescue loans. After exiting bankruptcy on June 10, 2009, under the control of Italy's Fiat S.p.A., Chrysler lost $3.8 billion for the remainder of the year.
Analysts say the auto maker appears to have turned the corner on the strength of ongoing cost controls and a recovery in sales.
“We think Chrysler may prove to be one of 2011's most surprising success stories,” Morgan Stanley auto analyst Stuart Pearson said in a report last week.
Worldwide Chrysler sales dipped 1 percent to 401,000 units during the latest period. But Chrysler's third-quarter U.S. sales rose 20 percent to 293,001 cars and light trucks.
In the U.S., demand for some of the auto maker's most profitable models rose sharply during the period. Sales of the Jeep Grand Cherokee rose 35 percent, Ram pickup sales were up 15 percent, and the Chrysler Town & Country minivan jumped 48 percent.
The average transaction price of a Chrysler vehicle during the third quarter was $29,350, 6.4 percent more than last year, according to Edmunds.com.
Chrysler has now been profitable on an operating basis for three consecutive quarters. During the second quarter, Chrysler generated $183 million in operating profits, up from $143 million in the first quarter.
The company has already exceeded its forecast for as much as $200 million in operating profit for all of 2010
Bloomberg contributed to this report, which appeared in Automotive News, a Detroit-based sister publication of Tire Business.