How did Chrysler do last year? It all depends on how you slice the numbers, isn’t it? As warned, Chrysler’s Q4 was a bit of a letdown, as net revenues dropped from $11.018b in Q3 to $10.763b, resulting in a $199m Q4 net loss. Interest expenses continue to be a major drag on Chrysler’s performance, costing $329m in Q3 and a whopping $1.228b over the course of the year. Cash dropped by nearly a billion dollars from Q3 to Q4, ending the year at $7.347b (not counting $2.3b in undrawn government facilities). Chrysler nearly hit the 1.6m worldwide sales number touted in its Five Year restructuring plan, as well as the 1.1m US-market target (although fleet mixes appear to have been higher than anticipated). Chrysler also hit its goal of $40b+ in net revenues and exceeded Operating Profit and EBITDA projections, but as the slide from Chrysler’s Q4 financial presentation [PDF here] shows, Both debt (which will likely be restructured this year to reduce costs) and depreciation/amortization have killed Chrysler this year… which is why EBITDA and Modified Operating Profit take the top billing in Chrysler’s financial reporting.
Pricing has seen modest improvement this year, rising from $28,100 to $28,300, and average incentives dropped by $100. Inventory levels increased last year, from 58 days of supply last January to 63 days in January. And though volume dropped in the fourth quarter, pricing and mix generated by new 2011 products did help stem some of the bleeding, adding $39m to the Q4 modified operating profit walk. Meanwhile, industrial and selling (SG&A) costs have increased due to production changeovers and marketing needed to bring the new products to market.
And though Chrysler essentially hit its targets for this year, next year is, as Sergio Marchionne puts it, “the year of execution.” And Chrysler’s Guidance for 2011 is necessarily ambitious: Increasing global volume from 1.516m units to over 2m units is hard enough. Using its projected 2011 SAAR of 13.4m units, Chrysler’s market share will have to jump from 9.2 percent to around 12 percent in order to make its 1.6m US volume goal this year. Harder still: taking Modified Operating Profit from $736m to over $2b on 500k incremental units globally. CEO Sergio Marchionne insists that new and updated products will bring gains in both pricing and volume, but he will need to deliver on both to keep his Chrysler turnaround rolling through 2011. Government debt will need to be refinanced, and some form of net profit will have to be shown this year anyway, if Sergio wants his “Christmas present” of an IPO this year, so we will either see a independent, profitable Chrysler this time next year.. or not.