Chrysler narrows loss in third quarter
Chrysler Group on Monday reported a loss of $84 million in the third quarter, its smallest quarterly loss since exiting bankruptcy protection last year.
The Auburn Hills, Mich., automaker narrowed its losses by cutting production costs and reducing its workforce. Revenue rose more than 5% to $11 billion from the second quarter, and its operating profit was up 31% to $239 million.
Chrysler was reorganized in bankruptcy last year, so there isn’t a yearly comparison.
The company, which needed a U.S.-government-backed bailout during the financial crisis, has been weighed down by interest payments on its $7.4 billion in government loans. The company paid $308 million in interest in the third quarter and $899 million so far this year. The company hopes to repay the loans by 2014.
Since being taken over by Italian automaker Fiat in June 2009, Chrysler has made steady progress. Its loss from July through September was less than half of its $172-million loss in the previous period.
In a conference call with analysts, Chrysler Chief Executive Sergio Marchionne said the company is ahead of schedule on his five-year financial plan.
“We got a bloody nose on the way into the recession,” he said. “We need to fight harder.”
While Chrysler’s overall sales dropped about 1% to 401,000 vehicles from the second quarter, the company is gaining U.S. market share. It now stands at 9.8%, up from 8.2% last year, according to TrueCar Inc., a Santa Monica auto sales and pricing information firm.
Jesse Toprak, an analyst at TrueCar, said that Chrysler should have success luring customers into showrooms in the coming months as it continues to roll out 16 new or redesigned vehicles by year’s end.
“The company has an influx of new products that I expect to connect with consumers,” he said.
Most recently, Chrysler has had success with sales of its new 2011 Jeep Grand Cherokee. Sales of the vehicle were up 41% through October, according to Autodata Corp.
Marchionne said the company will have a public stock offering sometime next year. In the meantime, he will be watching how the market reacts to General Motors Co.’s stock offering next week. GM also was in bankruptcy and received a government bailout.
Chrysler’s turnaround has been slower than domestic rivals Ford Motor Co. and GM, which have both reported profits.
Last month, Ford, which did not take a government bailout, reported third-quarter earnings of $1.7 billion. GM, which will report third-quarter earnings Wednesday, is expected to have earned around $2 billion.
