Paying off debt has its advantages, but it also carries a cost. Chrysler notes it posted a net loss of $370 million in the second quarter of 2011, largely because the company sought to pay off outstanding loans from both the U.S. and Canadian governments ahead of schedule.
The automaker says its adjusted net income for the quarter was $181 million, although that figure excludes “a non-recurring $551 million charge on the extinguishment of debt.” A “modified operating profit” rang in at $507 million — roughly 3.7 percent of net revenues — versus $183 million for the same period in 2010.
Net revenues totaled $13.7 billion, up 30 percent from revenues of $10.5 billion in the second quarter of last year. Looking at the first half of 2011, net revenues amounted to $26.8 billion, up 33 percent from the first half of 2010. Chrysler attributes the increase to new/ refreshed models raising the profit earned per vehicle sold.
“There is no doubt that Chrysler Group has taken a huge step forward this quarter,” Chief Executive Officer Sergio Marchionne said in a prepared statement. “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.”
Chrysler had $10.2 billion cash on hand as of June 30, up by $300 million from March 31. Fiat Auto reports second quarter revenue Tuesday. Marchionne is expected to outline Fiat and Chrysler’s new management structure in a conference call today.
Source: Chrysler Group LLC