On Monday, Fiat-Chrysler CEO Sergio Marchionne said that it will be “difficult” for the struggling U.S. brand to show a full-year net profit for 2010. He declined to speculate about the automaker’s third or fourth quarter financial performance. Marchionne made the comment while touring Chrysler’s Toledo, Ohio assembly plant with Vice President Joe Biden.
For the first quarter, the automaker reported a net loss of $197 million. Second quarter net losses fell slightly to $172 million. For the first half of 2010, Chrysler’s operating profit climbed to $326 million, exceeding its own estimate of $200 million.
After releasing its second-quarter results earlier this month, Chrysler said it would probably raise its 2010 outlook after posting its third-quarter results.
Marchionne said he is “satisfied” with Chrysler’s overall performance since coming under the control of Fiat S.p.A. following its emergence from the federally-backed restructuring bankruptcy last summer.
Addressing the gathering of autoworkers and reporters, Marchionne said Chrysler is making steady progress. “We are delivering on everything we said. We are doing it quietly, keeping our head down,” he said. He also said the company is “ahead of plan.”
Marchionne did not comment on the possibility of a Chrysler IPO. General Motors Company, which also underwent bankruptcy restructuring last summer, recently filed papers for an IPO that could take place as early as November. In the past, Marchionne has said that Chrysler would wait until 2011 at the earliest before taking the company public.
Marchionne also said that, were it not for the debt taken on through the federal bailout, Chrysler would already be in the black. “All the money given to us was debt,” he told the gathering. “The cost of carrying that cash is very large.”
Earlier this month, Marchionne admitted that Chrysler’s second-quarter operating profit had suffered, in part, because of “non-recurring industrial costs associated with the Jeep Grand Cherokee changeover.” However, he said the Grand Cherokee launch was crucial to the company’s long-term profitability.
In terms of profit margins, he pointed out that Jeep is second only to pickups. He also said he expects combined global sales volume for the Grand Cherokee and a yet-unnamed Dodge sibling to be between 200,000 and 300,000 units.
Since emerging from bankruptcy, Chrysler has been hamstrung by its lack of new products. Marchionne has previously stated that Chrysler’s margins “reflect the age of our product portfolio.” He also said the “almighty truth” of Chrysler’s performance will not be fully known until the first quarter of 2011 following the launch of new products, including the Fiat 500 small car.
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