Since emerging from bankruptcy in 2009, Chrysler has been slowly but steadily solidifying its financial performance, and the company's performance in the third quarter of 2010 appear to follow that trend. According to the automaker, it posted an operating (pre-tax) profit of $239 million in the third quarter, although it also posted a net loss of $84 million.
Although Chrysler is still in the red, this is a marked improvement even compared to the second quarter of 2010. In Q2, That $84 million deficit is less than half of the $174 million Chrysler lost last quarter, and is reportedly the company's smallest post-bankruptcy loss. Additionally, the $239 million operating profit is Chrysler's third consecutive quarterly operating profit, eclipsing the financial goals established during the transition from bankruptcy protection and bolstering Chrysler Group and Fiat CEO Sergio Marchionne's confidence in his company.
"A year ago, Chrysler Group laid out clear and concise five year financial goals," Marchionne said in a prepared statement. "After three consecutive quarters of better than forecasted results, we are not only living up to our commitments, but we are also exceeding our 2010 financial objectives."
In fact, Chrysler's results through the first ten months of the year have pushed its fiscal team to adjust its goals for the remainder of 2010. Chrysler is predicting it'll rake in a $135 million operating profit in the fourth quarter, which could bring its full-year operating profit totals to $700 million -- a far cry from the last estimate, which was $200 million. Additionally, Chrysler expects to have a positive free cash flow of $500 million at the close of 2010 -- previously, the automaker was bracing for a $1 billion loss.
A large chunk of Chrysler's $12 billion debt consists of the massive loans floated by the United States and Canadian government, and predictably, a large portion of the automaker's quarterly expenses are tied to paying interest on the loans. Chrysler has paid hundreds of millions of dollars in interest on its $7.4 billion in federal loans. According to the company's fiscal report, interest payments totaled $308 million in the third quarter of 2010, bringing the total paid in 2010 thus far to $899 million. That expense isn't likely to disappear anytime soon, as Chrysler has stated it doesn't expect to fully refund the loans until 2014.
Still, signs of some positive growth within Chrysler, along with General Motors' forthcoming initial public offering, are prompting analysts to speculate when the folks in Auburn Hills could launch an IPO of their own. According to the New York Times, the company is still at least a year away from going public.
Source: Chrysler, New York Times