Third-quarter results were "totally in line" with Chrysler's plans, says CEO Sergio Marchionne.
Long struggling Chrysler is having a decidedly good week. Just a day after getting word that its U.S. hourly workers have approved their new contract, the automaker is reporting it clawed back into the black during the third quarter with a $212 net profit.
The maker lost $84 million during the July – September quarter in 2010. The black ink is the result of a sharp surge in demand for Chrysler products, with revenues for the latest quarter up 19% to $13.1 billion.
“In the third quarter, Chrysler Group achieved increased sales and positive financial results, totally in line with the plan we laid out in November 2009. And in October, together with the United Auto Workers, we crafted a solid four-year contract that will support us in our growth plans and significantly reward our employees for their contribution to the revival of Chrysler,” said Sergio Marchionne, Chairman and CEO of both Chrysler LLC and its Italian partner, Fiat.
“This house continues to be fully focused on financial performance and making outstanding cars and trucks by fully leveraging its alliance with Fiat,” added the executive.
Chrysler reported a Modified Operating Profit of $483 million for the third quarter, or 3.7% of net revenue, up from $239 million, or 2.2% of net revenue, in 2010. The latest figures, the company said, “benefited from increased sales volume and improved pricing and mix, partially offset by increased advertising and industrial costs.”
(Chrysler workers approve new contract. Click Here for more.)
Notably, Chrysler drew down its cash account during the quarter, the figure falling to $9.5 billion from $10.2 billion as of June 30th.
The automaker has been struggling to push itself back into the black during what has proven an unusually tough year for the U.S. auto industry. But despite overall demand slipping below the originally forecast 13 million, Chrysler has been able to pick up momentum with new products like the 200 sedan and convertible and redesigned Jeep Grand Cherokee.
Nonetheless, Marchionne appears in no rush to stage the IPO he had earlier been predicting for the latter half of 2011.
The third-quarter earnings were released a day after the United Auto Workers Union confirmed its 26,000 members at Chrysler had ratified their contract with the smallest of Detroit’s Big Three. The contract holds labor costs close to $50 an hour, the lowest of the domestic makers, and allows Chrysler to continue hiring in new workers at a lower, second-tier wage.
The maker did agree to modest “signing bonuses” for its UAW members and also said it would invest another $1.3 billion in the U.S. market while adding 2,100 more union jobs.