Model Launches, Lower Shipments Slash Chrysler Profit 65%

Chrysler Group LLC netted $166 million in the January-March period of this year compared with $473 million a year earlier.

Quarterly revenue fell 6% to $15.4 billion. Retail vehicle sales grew 8% year over year to 563,000 units, mainly because of a 12% increase in U.S. demand. Adjusted operating income dropped 41% to $435 million.

Chrysler says first-quarter results were hurt by the cost of several key new-model launches and lower vehicle shipments caused by weak sales in Europe and import restrictions in Latin America.

But the company says operating profit improved in each successive month of the quarter as it rolled out the latest versions of the Jeep Grand Cherokee SUV and Ram heavy-duty pickup truck. Chrysler predicts a strong performance in the second half of the year, when it also will be selling the next-generation Jeep Cherokee midsize SUV.

The company boosted its market share in the three-month period by 0.2 points year over year to 11.4% in the U.S. and one point to 16% in Canada, where it is the market leader.

Chrysler generated free cash flow of $356 million in the first quarter compared with $1.7 billion a year earlier. Since the end of 2012, the company has bolstered its cash position by $300 million to a total of $11.9 billion on March 31.

Chrysler reiterates its full-year forecast for revenue of $72 billion-$75 billion, net earnings of about $2.2 billion, adjusted operating profit of $3.8 billion and free cash flow of at least $1 billion. The company expects to boost wholesale shipments by at least 8% to 2.6 million vehicles.