Chrysler Lost $300 Million Through April, Report Says
June 30 (Bloomberg) -- Chrysler LLC, the third-largest U.S. automaker, had an operating loss of about $300 million in the first four months of the year, less than projected by owner Cerberus Capital Management LP, according to documents provided to investors.
Cerberus had forecast a deficit of about $700 million, according to the report, presented at a June 12 meeting of the private-equity firm's investors. The analysis preceded today's announcement of Chrysler's plans to close a minivan plant and cut a shift at a pickup factory because of declining sales.
``They have clearly been very, very aggressive on the cost fronts,'' said Mark Oline, automotive analyst at Fitch Inc. in Chicago. ``The challenge is to keep cutting costs at the same pace and exceed the revenue declines.''
The documents also show Chrysler exceeding expectations set by Cerberus for reducing fixed costs as record fuel prices push U.S. vehicle sales toward 15-year lows. Total U.S. sales have dropped 8.4 percent this year. Chrysler's U.S. volume has plunged 19 percent as the automaker trims models, idles plants, eliminates jobs and cuts back on less-profitable sales to business fleets.
``We'd assumed several years of operating losses for Chrysler,'' said Timothy Price, a partner of Cerberus, who declined to discuss any details in a phone interview. ``They're ahead of their plan, and doing a good job despite one of the most adverse economic environments in our lifetime.''
Chrysler's revenue was $300 million less than projected for the period, while its $8.1 billion in cash was $3 billion higher than planned, the document said.
Chrysler, based in Auburn Hills, Michigan, hasn't disclosed financial figures since being sold by Daimler AG to closely held Cerberus for $7.4 billion in August. Chrysler spokeswoman Shawn Morgan declined to comment on the document.
The report says Chrysler had an operating loss of $1.2 billion in 2007 on revenue of $59.7 billion and ended the year with $9.5 billion in cash.
Some of the figures differ from what's been reported previously. Chief Executive Officer Robert Nardelli this month said the company ended 2007 with $9 billion in cash. Chrysler attorney Michael Hammer said in court hearings in February that the company lost $1.5 billion last year.
Chrysler's employment is expected to decline 12 percent this year and end 2008 at 63,700, including 18,500 salaried workers and 45,200 hourly workers, according to the document.
Chrysler will reduce output of the Dodge Ram pickup in Fenton, Missouri, to one shift by Sept. 2, President Tom LaSorda said on a conference call today. The minivan plant will close at the end of October.
``We just don't see two plants of capacity, and so we were forced to take a plant out,'' LaSorda said. ``People shifting to other segments of the marketplace left us no choice but to respond.'' Chrysler also makes minivans in Windsor, Ontario.
Nitro Year: 2007 (1 of 91,815 sold in 07)
Nitro Model: R/T 4X4 Stone White
CAT-BACK Exhaust, CAI, Projector Head Lamps
Fully-Equipped w/all factory options