News Column

Chrysler posts $690-million, 1st-quarter loss

May 12, 2014

By Brent Snavely, Detroit Free Press



May 12--Chrysler lost $690 million during the first three months of the year because of costs of repaying debt and repurchasing shares held by a UAW trust.

The Auburn Hills automaker said it spent $504 million to repay debt to the UAW Retiree Medical Benefits Trust and also recorded a $672-million charge to cover the cost of purchasing shares held by the trust.

Those charges are part of a deal struck between Fiat, Chrysler and the UAW trust that paved the way for Fiat to own all of Chrysler.

Chrysler would have earned $486 million for the first three months of the year without those expenses of nearly $1.2 billion. That's almost triple the $166 million profits the company reported for the same period a year ago.

Revenue rose 23% to $18.9 billion.

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Chrysler's performance was aided by the introduction of the Jeep Cherokee, brisk sales of its Ram pickups and a U.S. industry that continues to see gradual sales increases.

Globally, Chrysler sold 621,000 new cars and trucks during the first three months of the year, up 10% from a year earlier. In the U.S., the company's market share grew to 12.5% for the first quarter, up from 11.4% last year.

Chrysler also confirmed previous guidance for the year that it will earn between $2.3 billion and $2.5 billion this year.

Last week Fiat, Chrysler's parent company, reported a first-quarter loss of 319 million euros ($444 million) during the first three months of the year.

Fiat also was affected by a 315 million euros ($418 million) charge related to the cost of paying the UAW Retiree Medical Benefits Trust for the remaining Chrysler shares and the devaluation of Venezuela's currency.

Fiat and Chrysler announced a deal on Jan. 1 that called for the automakers to acquire the 41.5% of Chrysler owned by the UAW Trust for $4.35 billion. That deal closed on Jan. 21.

Now, the two companies are working toward the completion of the merger and a name change to Fiat Chrysler Automobiles. That name, along with an exchange of Fiat shares for shares in Fiat Chrysler Automobiles, will be up for a vote by Fiat shareholders this summer.

Stock in the combined company are expected to be listed on the New York Stock Exchange by Oct. 1.

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(c)2014 the Detroit Free Press

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Source: Detroit Free Press (MI)


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