One Time Charges Lead to Big Q1 Chrysler Loss
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AUBURN HILLS (WWJ) – Chrysler lost $690 million in the first quarter, a number that was greatly inflated by two “special events.”
Take those out, and the company would have posted a $486 million profit, which is a significant increase from the $166 million they made a year ago.
Chrysler had a $504 million non-cash loss on extinguishment of debt related to the VEBA–the union retiree health care trust. The company also had to pay out $672 million related to an understanding with the UAW related to support for the company’s World Class Manufacturing programs.
After that, the news was all good. Chrysler earned a “modified operating profit” on its core automaking operations of $586 million, which was 35 percent higher than last year.
That was helped by a ten percent increase in global sales, as well as several new products, which generally have higher profit margins than the products they replace.
Chrysler says it expects to earn around $2.5 billion for the full year, after one time charges.
Last week Chrysler announced a plan to significantly grow sales over the next five years, as it joins with Fiat. The new corporation, Fiat-Chrysler Automobiles, is expected to officially start operations before the end of the year.
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