State and Nation Business

Chrysler profit falls 65 pct. on lower shipments

DETROIT – Chrysler's first-quarter profit tumbled 65 percent as shipments of cars and trucks fell while it prepared to launch several key new vehicles.

The Auburn Hills, Mich., company said Monday that it earned $166 million in the January-March quarter, compared with $473 million a year ago. Revenue fell 6 percent to $15.4 billion.

Chrysler, which is majority-owned by Italy's Fiat SpA, said worldwide vehicle shipments fell 6 percent during the quarter to 574,000. Chrysler, like other automakers, books revenue when it ships vehicles to dealerships.

The company attributed the decline mainly to the end of production of the aging Jeep Liberty midsize SUV at a factory in Toledo, Ohio, last year. That factory is being prepped to build the Liberty's replacement, the all-new Jeep Cherokee, starting in the second quarter. Chrysler shipped 31,000 fewer Liberty models than it did a year ago, which caused most of the drop.

Also, factories that build the 2014 Grand Cherokee large SUV and the 2013 Ram Heavy Duty pickup truck were slowed by the changeover to the freshened models, the company said. And international shipments also were down due to the faltering economy in Europe and import restrictions in Latin America, Chrysler said.

Automakers frequently see shipments and sales drop as they retool factories for updated models. Chrysler expects profit to improve in the second half of the year when dealers are fully stocked with the new vehicles. The company kept its guidance of $2.2 billion in net income, revenue between $72 billion and $75 billion and shipments of 2.6 million to 2.7 million vehicles.

Sergio Marchionne, CEO of Chrysler Group LLC and Fiat, told analysts Tuesday that the quarter's results were "not so glorious."

He said the company still expects to meet its guidance for the full year with a stronger second half. But he said Chrysler must flawlessly execute the Cherokee launch. "There's not a guy in this house who thinks it's going to be a walk in the park," he said.

He said it was unfortunate that Chrysler reported a poor quarter just after Ford Motor Co. released strong earnings. Ford's first-quarter profit rose 15 percent to $1.6 billion as record earnings in North America tempered big losses in Europe. Ford's sales were up 10 percent worldwide.

"To be perfectly honest, I'm envious," Marchionne said.

The 2014 Grand Cherokee went on sale last month, while the 2013 Ram Heavy Duty trucks went on sale starting in January. Chrysler expects to begin selling the Cherokee sometime in the third quarter.

Fiat was given management control of Chrysler in 2009 when the troubled company nearly ran out of cash and had to be rescued by a U.S. government bailout. Now, with the economic troubles in Europe, Chrysler is providing a financial lifeline to Fiat, which owns 58.5 percent of Chrysler.

Chrysler finished the first quarter with $11.9 billion in cash, compared with $11.6 billion at the end of 2012. Debt was down $100 million from the end of the year, at $12.5 billion.

During the first quarter of 2012, Chrysler posted its biggest profit since leaving bankruptcy protection in 2009.

The first-quarter profit decline came even though worldwide and U.S. sales were up 8 percent from a year earlier.

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