Chrysler/Fiat CEO Sergio Marchionne meets with reporters at the 2012 Detroit Auto Show.
For the first time since 1997, Chrysler has ended the year in the black with a net profit of $183 million and a “modified” operating profit of $2.0 billion, the automaker reported this morning.
After standing widespread predictions of its demise on their head, Chrysler now is predicting another strong performance in 2012, including a double-digit gain in revenue and a 50% increase in operating income.
The figures come as a sharp turnaround for a company that declared bankruptcy less than three years ago and which survived only after receiving a more than $12 billion bailout from the U.S. Treasury. But the Chrysler of today, now controlled by Italy’s Fiat, is a decidedly different manufacturer that went into Chapter 11 protection shortly after the collapse of a failed merger with Daimler AG of Germany.
“The house is in good order. We are proud of the work we’ve done,” said Sergio Marchionne, who serves as Chief Executive Officer of both Chrysler Group LLC and Fiat SpA. “Now we greet a new year of high expectations with our heads down, forging ahead and focused on executing the goals we’ve set for ourselves as a company.”
The U.S. side of the trans-Atlantic alliance was able to stay in the black despite a $551 charge related to the payoff of Chrysler’s U.S. and Canadian government loans – six years early. By meeting that and other targets set as part of the Chrysler bailout, Fiat now owns a 58.5% stake in the U.S. maker. Paying off the loans and turning to alternate – lower cost — lenders, meanwhile, is estimated to be saving Chrysler about $300 million annually.
Adjusted net income – excluding that charge – came to $734 million for the full year, which Chrysler noted was in excess of its original guidance. The maker had reported a $652 million net loss for 2010.
Chrysler, meanwhile, reported a $2.0 billion modified operating profit, which it noted was 2.5 times more than in 2010. The operating profit came to $508 million in the fourth quarter, with net income for that 90-day period totaling $225 million.
Revenues rose 31% for the year, to $55.0 billion, while the figure jumped 41% during the fourth quarter, to $15.1 billion.
The maker has clearly seen things turn up in recent months. Its U.S. market share surged to 10.5% for the all of 2011, up from 9.2% the year before, largely due to new products like the Chrysler 200 sedan and Jeep Grand Cherokee. For the full year, worldwide vehicle sales rose 22%, to 1.855 million.
During the final quarter, sales surged 36% at home, and 22% overseas – where it has begun gaining ground with products like the bigger 300 sedan sold in European market through the Lancia brand.
The coming year could be a critical one for Chrysler as it will have to prove that the gains of 2011 weren’t a fluke. The maker has a number of important product introductions coming – most notably the debut of the all-new 2013 Dodge Dart. The compact sedan is the first product to be based on a platform jointly developed by Chrysler and Fiat and will eventually be used as the “architecture” for a wide variety of different products sold by the various Chrysler and Fiat brands.
Though destined to sell in significantly lower volumes, Chrysler’s Dodge brand will also turn to a Fiat platform for the underpinnings of the reborn “halo” car, the 2013 Dodge Viper.
In an interview last month, CEO Marchionne cautioned that, “Today there are two significant threats fuelling fears on either side of the Atlantic: the specter of a faltering recovery in North America and the sovereign debt situation in Europe.”
As the smallest of the domestic U.S. automakers, analysts believe Chrysler could be especially vulnerable to either problem.
Nonetheless, the maker has set some aggressive goals for 2012; it is targeting net income of about $1.5 billion, with an operating profit of $3.0 billion or more. It expects revenues to surge to at least $65 billion, and to generate free cash flow of a minimum $1.0 billion, compared with $1.9 billion in 2011.
Paul A. Eisenstein contributed to this report.