Strong US sales help Chrysler post profit for first time since bankruptcy

GlobalPost

US automaker Chrysler Group LLC has reported a fourth-quarter and full-year profit for the first time since emerging from bankruptcy three years ago, boldly predicting that profits will be eight times higher in 2012 as it increases its international shipments of new vehicles and corners a bigger piece of the US market.

Chrysler, which is now privately held and majority owned by Italy’s Fiat SpA, earned $183 million last year, reversing losses of $652 million in 2010, the Associated Press reported.

The company is setting its sights high for 2012, aiming to achieve a target of about $1.5 billion in net profits for 2012 and increase revenue by 18 percent through a boost in global auto sales and increased cost savings.

It is a huge turnaround for Chrysler, given that 2010 represented the firm’s first full year out of bankruptcy protection. It was taken over by Fiat in 2009 as part of a government bailout. Net income of $225 million for the fourth quarter of 2011 was the largest net profit since the company’s restructuring, Reuters reported. 

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In a nice twist, Sergio Marchionne, who heads up both companies as chief executive, is now counting on Chrysler to shore up Fiat, whose volume brands lost about $660 million last year due to sinking European auto sales brought on by the region’s sovereign debt crisis.

In the third quarter of 2011, Chrysler accounted for two-thirds of Fiat’s profits, and today reported a 44 percent increase in monthly US deliveries for January, according to Bloomberg.

Commenting on the Detroit-based automaker’s reversal of fortunes, Marchionne said: “Our house is in good order.”

Separately, the company confirmed that hourly and salaried workers will receive a bonus based on the company’s performance, the Wall Street Journal reported.

In a letter sent to employees on Wednesday, Marchionne said:

“You have been to hell and back, and you defied predictions of our demise. Your efforts rewrote the history that so many naysayers had forecast”.

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