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Former Chrysler pays off debt, makes money

by David Zatz on

CFO Richard Palmer walked investors through FCA US’s second-quarter results in a webcast today. He noted that margins for North America were higher than in other regions, partly because of  exchange rates.

The American division of FCA, formerly called Chrysler Group, has around $2 billion in cash, nearly double the cash at the end of March. Free cash flow was around $1 billion, much higher than last year, but $3 billion was spent — $1 billion sent to FCA and $2.9 billion used to prepay long term loans.


Net income for FCA US was $598 million, lower than the second quarter of 2014 ($619 million) due to a $90 million charge for the NHTSA consent order, and $71 million to extinguish debt.  Total liquidity was at a healthy $13 billion on June 30, 2015 — $2 billion less than on March 31, 2015, due partly to prepayment of loans carrying an 8% interest rate.

Worldwide, the former Chrysler sent out 1.5 million vehicles in the quarter, 7% higher than in Q2 2014 (when it was 1.4 million). Net revenues shot up from $20.5 billion to $22.6 billion, and the operating profit rose from $985 million to $1,352 million.

The company spent less on advertising and cut dealer discounts (mostly in the United States), while the average price of cars sold rose — though they cost more to build due to “content enhancements.” In the end, the profit margin rose from 4.8% of net revenue to 6.0% of net revenue.

FCA still reports FCA US figures due to terms of various bond agreements, and may stop breaking out the numbers when those bonds have been repaid.

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