Chrysler reports $370 million net loss in 2011 Q2
In 2011 Q1 Chrysler posted profits of $116 million (click here for more on that), the first time that the folks under the Pentastar have shown a profit since entering into bankruptcy but that trend didn’t last long as Q2 brought about a net loss of $370 million. However, when you consider the fact that during the second quarter of 2011, the Chrysler Group incurred charges of $551 million through their early payoff of government TARP loans – things don’t look quite as bad. Had Chrysler been less aggressive with their goal of getting out from under Uncle Sam’s watchful eye and avoided that $551 million non-recurring expense; the company could have been looking at profits in the area of $181 million.
Sergio Marchionne, Chief Executive Officer for both Chrysler and their parent company Fiat, had this to say about the Q2 results:
“There is no doubt that Chrysler Group has taken a huge step forward this quarter. Refinancing our debt and repaying our government loans six years early, reinforces our conviction that we are on the right path to rebuilding this Company and restoring it to its rightful place on the global automotive landscape. We are changing both the image and substance of our company in order to regain the faith of consumers. There is no substitute for hard work and we are committed to continuing to deliver on the business plan numbers we outlined.”
While the net loss of $370 million surely isn’t the positive news that many Chrysler enthusiasts had been hoping for, the company’s announcement of their 2011 Q2 results were fairly strong otherwise. Net revenues for the second quarter of 2011 climbed roughly 30% from last year; jumping from $10.5 billion in 2010 to $13.7 billion in 2011 and modified operating profit climbed from just $183 million in to $507 million in 2011. Finally, the company’s cash flow exploded from just $300 million at the end of the first quarter of 2011 to a whopping $10.2 billion after the end of June.
What does all of this mean? Well, even though Chrysler posted a pretty substantial net loss in the second quarter of 2011, the results of Q2 when the hefty loan repayment costs are removed show that the company is moving in the right direction – and at a very strong pace. Chrysler’s new and revised models have helped the company grow throughout the year and the addition of the Fiat brand will help the company continue to grow as they enter new market segments.
Finally, now that Chrysler has fully paid off the bailout loans from the American and Canadian governments, the company will be free to operate without any control from the feds and based on the financial status of the US government – it is probably a good idea to have someone a little better at holding onto a dollar calling the shots. Once Chrysler goes to market with a vehicle that yields 40mpg thank to Fiat technology (expected to be the replacement for the Dodge Caliber), Fiat will receive the final 5% incentive bonus from the government; raising their total ownership to 58.5%. The remaining 41.5% will still belong to the UAW retiree trust fund.
Other Chrysler News:
Chrysler repays TARP loans six years early
Chrysler suspends 9 workers for drinking and smoking during lunch
Changes announced for the 2012 Dodge Challenger SRT8 392
Chrysler UAW workers caught drinking, smoking pot during lunch – for the third time
The Dodge Viper sets the NJ Motorsports Park record
Chrysler launches RedLineDodge.com at the 2011 Carlisle Chrysler Nationals
Ram HD trucks get a new 6-speed transmission in 2012