Chrysler’s Quarterly Performance Sets Record : Autos: The $938-million profit mirrors the boom the U.S. industry has enjoyed this year.
Chrysler Corp. reported record quarterly sales and earnings Tuesday, a reflection of the fact that the U.S. auto industry is running at full throttle.
The nation’s No. 3 auto maker posted first-quarter earnings of $938 million, or $2.55 a share, contrasted with a loss of $4.44 billion, or $13.68 a share, in the first three months of 1993. Last year’s results were skewed by a onetime charge of $4.97 billion for future retiree health benefits.
The quarterly profit is the best ever for Chrysler. The previous best three-month period was 1984’s second quarter, when the company earned $801 million.
Still, Chrysler’s stock--like those of other auto makers--was dragged down Tuesday by fears that higher interest rates will curb auto sales. Chrysler closed $2.375 lower at $48.50, after trading as low as $47.25 on the New York Stock Exchange.
The firm’s first-quarter sales totaled $13.22 billion, surpassing the previous record of $12 billion set the previous quarter. Sales reached $10.90 billion in 1993’s first quarter.
“From a profit standpoint, Chrysler is going like gangbusters,” said David Healy, an analyst with S.G. Warburg & Co. in New York.
Chrysler’s strong financial performance mirrors the boom that the U.S. auto industry has enjoyed this year. Both domestic and foreign manufacturers are enjoying double-digit sales gains.
“We see the steady improvement in industry sales continuing,” Chrysler Chairman Robert Eaton said.
Sales demand is so strong that the company said it is having trouble meeting dealer orders for its Dodge Ram pickup, Neon subcompact, Jeep Grand Cherokee and minivans. Minivan sales were boosted by incentives designed to dissuade customers from buying Ford’s new Windstar. The program raised Chrysler’s average incentive to $710 per vehicle from $650 the previous quarter but succeeded in increasing its share of the minivan market 4 points to 48.9%.
Most of Chrysler’s plants are running at full capacity. The company is spending $1.8 billion over the next three years to increase production by adding new shifts, expanding plants and removing bottlenecks.
Chrysler is also strengthening its balance sheet. The firm contributed $684 million in the quarter to its pension fund, which had a $2.2-billion shortfall as of Dec. 31. It has also accumulated a cash cushion of $6.5 billion, a reserve it can tap during the next economic downturn.
