Chrysler's Making Bank
by
Jack Baruth
Published: October 27th, 2011
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In the post-bailout, post-giveaway, billion-dollar-bonus-baby and occupied-Wall-Street era, it seems almost impossible to correlate reported financials to anything substantive. Nor does a single swallow make a summer.
Chrysler, however, is hoping that today’s third quarter report is merely the vanguard of a Capistranian return to profitability.
Quoth the press release,
- Chrysler Group’s third quarter 2011 net income totaled $212 million compared with a net loss of $84 million a year ago
- Third quarter net revenue was $13.1 billion, up 19 percent from a year ago
Modified Operating Profit(b) grew to $483 million in the quarter, from $239 million a year ago - Chrysler Group ended the quarter with $9.5 billion in Cash(d) versus $10.2 billion at June 30, 2011
- New four-year national labor agreement with the UAW ratified on October 26
Then there’s a quote from The Be-Sweatered Man himself talking about focus, Fiat, financials, and Funions. Or something like that. It just goes to show that if somebody gives you a car company for free and loans you the money to run it, almost anybody can make money, right?
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"It just goes to show that if somebody gives you a car company for free and loans you the money to run it, almost anybody can make money, right?" Actually, the vast majority of people would still not make it work, even with those initial conditions.
That does sound like potentially good news for Chrysler. The thing to remember is that Chrysler fell so far (but I don't think in some ways, not as far as GM has in recent years) and that they are working from a much smaller stack of bills available for reworking their models and what they are doing now is improving what they have with the idea of creating cash to enable them to be able to redo/replace these current models with new designs. I have to agree, they need to reduce the weight of some of these models, especially the Challenger/Charger and the 300. the Avenger/200 are merely refreshes of the previous car but improved enough to make them sell better - for now. Give them time and I think we'll see them do well over the long haul, Fiat and Chrysler seem to be working together to ensure that this is the case. That said, I've still got my doubts on GM's ability to overcome their corporate culture and if that continues to be an issue, they may fall further down the ladder and if that happens, we just might see it this way, Ford, then Chrysler (assuming Chrysler does well) and then GM. But a lot has to happen before that happens and it's much too early to tell what's going to be in a few years.
oh, silly amateur investors. profit is nice, but cash is king. a look at its 8k shows Chrysler claiming $481 million in new investments, which hurt its cash position. given the nature of the business, this figure is not unusual. however, I would really like to know how $213 million in Net Income turns into a negative $171 million in operating cash flow. I guess we have to wait for the 10Q filing in 2 weeks.
Beefmalone, to get an idea of how tough the Imperial was built here is a nice article, it starts on page 3. http://www.imperialclub.com/Articles/EBerg/index.htm