Chrysler Announces Record Quarterly Profit of $777 Million

Chrysler Corp., adding an exclamation point to the resurgence of the U.S. automobile industry, reported record fourth-quarter earnings Tuesday, as vehicle sales soared and operating costs declined.

The company, which was on the brink of bankruptcy four years ago, reported net income of $777 million for the last three months of 1993. Before taxes and special charges, Chrysler earned $3.8 billion in 1993.

“It was an exceptional year,” Chairman Robert Eaton said.

Chrysler is the smallest of the Big Three but also the hottest. Its market share is now nearly 15%--the highest proportion in 23 years. The company was the star of the recent auto show in Detroit, where it unveiled several new models.

The U.S. auto industry is emerging as the world’s strongest. The restructuring of the last few years is beginning to pay off with improved product quality and world-class manufacturing efficiency, factors that are showing up on the bottom line.

Chrysler’s fourth-quarter earnings translate into $2.11 a share, far more than Wall Street’s consensus estimate of $1.61 a share. The company earned $1.12 a share, or $356 million, in the equivalent period of 1992.

While Chrysler had a net loss of $2.6 billion, or $7.62 a share, in 1993, that reflected accounting charges of $4.7 billion for retirees’ medical benefits and $283 million for post-employment benefits.

Chrysler earned $2.4 billion, or $6.77 a share, without the accounting charges. In 1992, it earned $723 million, or $2.21 a share.

“They are phenomenal earnings,” said Maryann Keller, an analyst for Furman Selz of New York. “Part of it is product-related and part of it is the economy.”

Chrysler rose 75 cents, to an all-time high of $62.50 a share, on the New York Stock Exchange.

With revenue of $43.6 billion, the company sold 19% more vehicles last year than in 1992. Sales of minivans, LH mid-size sedans and Dodge Ram pickups were particularly strong. It has high hopes for new 1994 models aimed at import buyers: the low-priced Neon, the Cirrus and Dodge Stratus.

With sales up, Chrysler’s profit margins have improved sharply. The company said its pretax earnings per car was $1,335 in 1993, compared to $325 in 1992. In the fourth-quarter, its profit margin was $1,727.

The main reason for the higher profit was lower cash rebates and other enticements given to buyers. The average incentive per car was $650 in the last quarter, compared to $1,020 a year ago.

Incentives are likely to drop further if the economy remains strong and consumers stay in a buying mood. Chrysler can also keep rebates to a minimum on new products coming to showrooms.

Unlike Ford and General Motors, Chrysler has not been a major force internationally. But that may change in the coming years as it makes a push to export popular models to Europe and the Asia-Pacific region.

Last year, Chrysler’s international sales totaled 105,849 vehicles, up 45% from 1992. In Europe, it sold nearly 61,000 vehicles and could top 100,000 this year.

Chrysler also is trying to improve its quality rankings. Company officials acknowledge that this is their No. 1 priority.