Chrysler posts Q4 net income of $1.6 billion with help of onetime tax gain
Rank-and-file to each get about $3,500 in profit sharing, performance bonuses
DETROIT -- Chrysler Group reported an increase in earnings for the fourth quarter as the launch of the 2014 Jeep Cherokee and higher U.S. sales helped the automaker to its third straight annual profit.
Chrysler's net income of $1.6 billion was aided by a onetime tax gain of $962 million, the company said in a statement. A year earlier, Chrysler netted $378 million.
Adjusted net income for the quarter was $659 million. Fourth-quarter revenue advanced 24 percent to $21.2 billion, helped in part because the automaker held over 25,000 Jeep Cherokees past the Oct. 1 start of the quarter to recalibrate their transmission software.
For all of 2013, Chrysler posted net income of $2.8 billion, up 65 percent from the $1.7 billion annual profit posted in 2012. Adjusted net income for the year was $1.8 billion.
Revenue for 2013 was $72.1 billion, up 10 percent from $65.8 billion in 2012.
In a separate announcement today, Chrysler and Fiat said their combined company would be renamed Fiat Chrysler Automobiles NV. Pending shareholder approval, the new entity will be incorporated in the Netherlands and have a fiscal domicile in the U.K. for tax purposes. The company's primary listing will be on the New York Stock Exchange with a secondary listing in Milan. The automakers' merger was announced Jan 1. The combined company also unveiled its new logo.
On a conference call with analysts, CEO Sergio Marchionne called the joining of Fiat and Chrysler into Fiat Chrysler Automobiles "the conclusion of a saga" that began with Fiat taking control of bankrupt Chrysler in June 2009.
Chrysler's 37,200 unionized hourly employees in the United States will receive profit sharing checks of $2,500 within the next four to six weeks. In addition, the employees will receive a quality award in June and a performance award in December of at least $500 each, for a total of $1,000.
Employees in some plants will receive additional money based on attaining agreed-upon quality and efficiency measurements, Chrysler said.
On Tuesday, Ford said its hourly workers would receive a record profit-sharing bonus of $8,800 -- up from $8,300 a year ago.
Rising market share
Chrysler's U.S. market share rose two-tenths of a percentage point to 11.6 percent in 2013 on U.S. sales of 1.8 million vehicles, according to the Automotive News Data Center. The automaker's U.S. sales were up 9 percent in 2013, buoyed by sales of its reengineered pickup line and SUVs.
The Jeep Cherokee went on sale in the United States in late October. Marchionne told analysts that the costly delayed launch was four months later than originally planned.
Globally, Chrysler said it delivered just over 2.6 million vehicles in 2013, including vehicles it makes for other automakers, primarily for parent company Fiat. The automaker said it had sales of 592,000 units during the fourth quarter, up 11 percent from the same period a year ago.
The company reported cash of $13.3 billion, up from $11.6 billion one year ago, and said it had a gross industrial debt of $12.3 billion at the end of 2013, down from the $12.6 billion it had at the same point in 2012.
This is the first time that Chrysler Group has reported more cash than debt since the company was created from its U.S. government-backed bankruptcy reorganization in 2009.
In response to analyst questions, Marchionne said:
- The new Fiat Chrysler will try to be listed on the NYSE by Oct. 1. "In typical style of the house, we'll try to get this done as quickly as possible."
- There is no evidence of "uncontrolled competitive behavior" being exhibited in North America by Chrysler or its competitors that would put undue pressure on pricing.
- Fiat Chrysler management is debating whether the automaker needs to add additional pickup manufacturing capability. Marchionne says his preference is to run existing plants in Warren, Mich., and Saltillo, Mexico, "flat out." He said the chance of adding another plant was "under 50 percent." He said he believes Chrysler could increase pickup production by 15 or 20 percent more without requiring an additional plant.
- Chrysler's 79-day supply of unsold inventory is due primarily to the ramp up of the Jeep Cherokee and stocking up dealers on 2014 Chrysler 200s and Dodge Avengers. Chrysler's Sterling Heights Assembly plant will go down this quarter to switch over to the 2015 Chrysler 200, which also replaces the Avenger. The plant is expected to be operating again at regular capacity about 75 days after the switchover begins, Marchionne said.
- Chrysler narrowly missed its financial guidance because it didn't deliver 50,000 vehicles that it had planned. Though he didn't name the vehicle, he said it didn't "take a rocket scientist" to figure out the culprit. The reference likely referred to the Cherokee's troubled launch.
- The Jeep vehicle which will eventually be built in China for Chinese consumers will be "a version" of the 2014 Cherokee, but not an exact copy of the Toledo-built mid-size SUV. Similarly, new Jeeps being planned for Brazil will be compact and sub-compact models, and not the mid-sized Cherokee or larger, which will continue to be imported into Latin America from the United States.
- He wouldn't "jinx" the Cherokee by providing a forecast for how many Chrysler can sell, both in North America and abroad. "It's doing well, and I don't want to jinx it with a forecast," Marchionne said.
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