Chrysler CEO Sergio Marchionne, center, UAW President Bob King, right, and UAW Vice President General Holiefield, left, applaud U.S. President Barack Obama during a visit on July 30, 2010.
Chrysler Group LLC today said that Q2 net revenues increased to $10.5 billion, an 8.2% improvement over the prior quarter. First half 2010 net revenues totaled $20.2 billion.
As a result the company ended Q2 2010 with an operating profit of $183 million and a first half 2010 operating profit of $326 million.
However, Q2 resulted in a net loss of $172 million, down slightly from a loss of $197 million in Q1.
Analysts had projected an operating profit of $400 million. And achieving profitability is crucial to plans to taking the company public some time in 2011.
In the 14 months since Chrysler emerged from bankruptcy it has only had one major product launch, the Jeep Grand Cherokee, which just went into production at the end of May. The changeover cost the company $64 million in revenue, not including tooling and other plant costs. Moreover Chrysler is carrying enormous interest costs from outstanding taxpayer loans. Payments of $296 million in Q2 accounted for nearly all of the swing between the operating profit and the net loss.
Chrysler marketshare remained at 9.4% in the United States and down slightly to 12.9% in Canada, its two primary markets as it has almost no presence overseas.
Sergio Marchionne, Chief Executive Officer, Chrysler Group said, “an extraordinary amount of work still lies ahead,”
The Q2 2010 operating profit improvement of $40 million, compared to Q1 2010, was driven primarily by continued volume increases. This improvement was partially offset by the impact of the Jeep Grand Cherokee changeover and what Chrysler called “moderate” increases in incentive programs.
Worldwide vehicle sales were 407,000 units for Q2 2010, an increase of 22% compared to 334,000 units in Q1 2010, with all brands posting gains.
Chrysler is ramping up for what it says will be a new product offensive starting in the second half of the year. Some 16 all-new or refreshed products are launching, including an all-new Chrysler 300, Dodge Charger, Dodge CUV, the Fiat 500, and the Chrysler Sebring replacement.
“Customer traffic in our dealerships and confidence in the Company’s future continued to grow with the launch of the all-new 2011 Jeep Grand Cherokee, one of the signature vehicles for Chrysler 2,” said Marchionne.
Pending the closing and reporting of Q3 financials, Chrysler confirms the following targets for the year:
- Net Revenues of $40 – 45 billion
- Operating Profit of $0.0 – 0.2 billion
- Modified EBITDA of $2.5 – 2.7 billion
- Negative Free Cash Flow of $1.0 billion
Marchionne said it is highly probable that the Chrysler will upgrade guidance for 2010 when announcing Q3 2010 results.