Chrysler reports $197M 1Q loss, cash balance grows

DETROIT — Chrysler Group LLC lost a staggering $3.8 billion from the time it left bankruptcy protection June 10 through the end of last year, but the automaker says its fortunes improved dramatically in the first quarter.

The struggling company, now run by Italy's Fiat Group SpA, cut its net loss to $197 million from January through March and said it posted an operating profit from selling cars and trucks, before interest and taxes.

Moreover, Chrysler said it generated $1.5 billion in cash during the quarter, raising its reserves to $7.4 billion and reducing the likelihood that it will need more government aid. And the company predicted its operations would break even or be slightly profitable this year.

The Auburn Hills, Mich., automaker said Wednesday that it made an operating profit of $143 million in the first quarter, excluding taxes and interest.

"This positive operating result in the first quarter is a concrete indication to our customers, dealers and suppliers that the 2010 targets we have set for ourselves are achievable," CEO Sergio Marchionne, who also heads Fiat, said in a statement. "We are also generating cash to finance the investments being made in our product portfolio and brand repositioning."

First-quarter revenue was $9.7 billion, up 3 percent from the fourth quarter, the company said. Revenue for the post-bankruptcy period of last year was $17.7 billion.

Chrysler said its operating loss for the last half of 2009 was $895 million.

The company also said the huge net loss for the second half of the year included a noncash charge of $2 billion as the company moved blue-collar retiree health care liabilities off its books to a trust fund run by the United Auto Workers union.

Chrysler last reported earnings in August 2007, just after it became a private company when it was sold by Daimler AG to private-equity firm Cerberus Capital Management. At that time, it reported a second-quarter profit of $549 million, although it said it would have lost money without a $946 million gain because it didn't book scheduled depreciation and amortization that quarter.

Cerberus didn't invest the cash needed to weather the worst auto sales decline in more than 25 years, and as a result, Chrysler came close to running out of money at the end of 2008. The U.S. government stepped in, authorizing $15.5 billion in aid and appointing Marchionne to run the company after it emerged from Chapter 11. Chrysler said it has not drawn $2.4 billion of U.S. and Canadian government aid.