DETROIT -- Chrysler Group said net income fell to $166 million in the first quarter as costs of two large product launches crimped the automaker's seventh consecutive quarterly profit.
Chrysler profit tumbles on costs of product launches
Profit fell 65 percent from the $473 million posted during the same quarter of 2012, Chrysler said in a statement today.
First-quarter revenues dropped 6 percent to $15.4 billion. Global shipments declined to 574,000 from 607,000 a year earlier, mainly because of the end of Jeep Liberty production.
Chrysler said its profits were hurt by costs tied to the launches of the re-engineered Ram pickup line and the Jeep Grand Cherokee.
The company said its net income for the year would be about $2.2 billion, in line with earlier forecasts. Chrysler also kept its estimate for about 2.65 million vehicle shipments this year.
Chrysler said it had $11.9 billion in cash on hand, up $600 million from the $11.3 billion it reported a year ago.
CEO Sergio Marchionne had warned analysts earlier this year that the company's first quarter profits would suffer from the launches of two of its most profitable products, the Ram heavy-duty pickup and Jeep Grand Cherokee. He said Chrysler could still make its year-end projections, but doing so would require "flawless execution" for the remainder of the year.
"This is a one-time event. It's a one-off. Just close your eyes, plug your nose, and move on from here," Marchionne said. "I knew I was going to be limping in the quarter. I didn't know that I was going to be limping that much."
The company's gross industrial debt fell to $12.5 billion, down slightly from the $12.6 billion recorded during the same period of 2012.
Marchionne spoke at length today about the upcoming launch of the 2014 Cherokee, which replaces the Liberty in the Jeep lineup. He said the first saleable Cherokees won't go into production until "sometime in the middle of June," and that it would be a slow ramp-up through November.
Marchionne also took shots at European austerity measures and the high relative value of the euro.
"We tried the medicine, but the medicine, unfortunately, is killing the patient," the Chrysler-Fiat CEO said. He said the euro, at its current level, was uncompetitive to other world currencies, making it more difficult to produce and sell cars on the continent.
Fiat profits down
Meanwhile, Fiat confirmed its 2013 financial targets despite lower first-quarter profits stemming from the reduced earnings at Chrysler and continued losses in Europe.
Fiat said group trading profit fell 23 percent to 618 million euros ($805 million) in the first three months as Europe's auto market contracted further. Revenue dropped 2.3 percent to 19.8 billion euros in the quarter, Fiat said in a statement today.
Fiat stuck to a target to increase full-year trading profit, or earnings before interest, taxes and one-time items, to between 4 billion euros and 4.5 billion euros from 3.81 billion euros in 2012.
"Guidance is overly optimistic given the weaker-than-expected start to the year in terms of trading profit, particularly in the case of Chrysler," David Arnold, an autos specialist with Credit Suisse in London, said today in a note to clients.
Fiat said its Europe, Middle East and Africa region had a 111 million euros loss (before interest and taxes, or EBIT) in the quarter, reduced from a 170 million loss the year before, as lower volumes and pricing pressure were offset by sales of the new Fiat 500L and savings in administration costs.
Reuters and Bloomberg contributed to this report.
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