Citing Strong First Quarter, Chrysler Mulls Initial Public Offering for 2010


Chrysler surprised analysts last month when it reported a $143 million operating profit in the first quarter of 2010, however after taxes and interest expenses it lost $197 million. Regardless of the loss, the automaker is reportedly considering launching an initial public offering later this year.

“This is an issue the board will look at very closely for the remainder of 2010,” said Chrysler CEO Sergio Marchionne. “The fact we’ve gotten this far would suggest there’s a strengthening base for looking at an IPO in a much shorter time frame than most people would expect. We’ll do it as quickly as we can.”

The push towards an IPO would allow Chrysler to help pay off the $12.7 billion it owes its debtors, but the timing will rely heavily upon the strength of the stock market, to say nothing of the company’s continued performance. Following bankruptcy, several cost-cutting measures, and improved sales (although behind the industry, trend sales have increased over the last four months), Chrysler is in better financial health than it was a year ago. Marchionne believes early projections for the company were “conservative,” and it will break even on an operating basis for the 2010 fiscal year.

That said, the company has burned nearly $4 billion since emerging from bankruptcy, and needs to launch new products sooner than later. On that front, the 2011 Jeep Grand Cherokee will finally launch this summer, while the subcompact Fiat 500 will debut in North America later this year. Recent reports also suggest that Chrysler will likely launch new Fiat-based subcompacts before 2012, well ahead of its original timetable.

Source: Reuters, Automotive News (Subscription required)

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