Chrysler Group LLC on April 21 issued its financial results for first quarter (Q1) 2010. In Q1 2010, Chrysler net revenues increased to $9.687 billion, representing a 3 percent increase over the prior quarter. Chrysler ended Q1 2010 with an operating profit of $143 million.
“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,” said Sergio Marchionne, chief executive officer, Chrysler Group LLC.
“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 and some mix improvement due to the successful 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 billion including the carrying value of the UAW Retiree Medical Benefits Trust (VEBA) note of $3.863 billion, which was reclassified from OPEB liabilities to financial liabilities due to the VEBA settlement which occurred on January 1, 2010.
Cash was $7.367 billion compared to $5.877 billion 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 vs. 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.
Chrysler is on track to achieve its targets for the year. These targets, announced on November 4, 2009, are as follows: