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Chrysler revenues up, positive cash flow

by David Zatz on

Chrysler’s net revenues rose to $11 billion in the third quarter of 2010, up 5% from the second quarter; the net loss was cut to $84 million, less than half of Q2’s $172 million loss. Cash flow was positive, with $419 million coming in, leaving Chrysler with $8.3 billion in cash as of September 30, 2010. Chrysler also has $2.3 billion in undrawn loans.

Chrysler raised its full-year estimate to an operating profit of $700 million (originally forecast to break even), with positive free cash flow of $500 million (up from -$1 billion).

Year to date, Chrysler has achieved an operating profit of $565 million, with a net loss of $453 million, on $31 billion in revenues. Chrysler currently (as of September 30) owes $12 billion to various banks ($5.7 billion to the U.S. Treasury, $4 billion to the UAW VEBA, $1.2 billion to the EDC, $400 million to the Mexican Development Bank, and $700 million to others); its net debt (after cash on hand) is $3.8 billion, up by $400 million (corrected, thanks Mike Walker) from June 30, 2010, due to the need for new product launches.

The results are higher primarily due to improved mix and pricing, credited to the launch of the new Jeep® Grand Cherokee, albeit partly offset by increased costs from plant changeovers. Average incentives fell from $4,200 to $3,900 (in the third quarter of 2009, average incentives were $4,300). Average transaction prices have increased dramatically since the third quarter of 2009, and are currently at $27,300 (third quarter).

85% of dealers are reporting profitability, the highest level since 2000; half of dealers are at or above 1.5% return on sales.

Worldwide sales were 401,000 vehicles, down 1% from the second quarter, “primarily due to seasonally reduced fleet volumes.” US market share increased from 9.4% to 9.6% from the prior quarter. Inventory was quoted at 58 days of supply. Canada market share fell somewhat to 12.8% and sales outside North America have fallen somewhat.

Sergio Marchionne pointed out that “In a mere 16 months, the Company is delivering 16 all-new or refreshed products led by the critically acclaimed all-new 2011 Jeep Grand Cherokee and including the Fiat 500, signaling the return of the Fiat brand to the U.S. and Canada. We are committed to ensuring that every new vehicle this company launches has the same high quality and technological advances as the Jeep Grand Cherokee. Our 2010 accomplishments are just the beginning of building Chrysler Group into a vibrant and competitive auto maker.”

New product launch costs were $65 million in the second quarter, $55 million in the third quarter; for the fourth quarter, launch costs are estimated at $100 million.

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