DETROIT—Chrysler Group LLC reported a third-quarter loss of $84 million Monday but raised its forecast, saying it will report an operating profit and positive free cash flow for the year.
The company posted a net loss of $172 million in the second quarter. There was no year-over-year comparison since the company was reorganized in bankruptcy protection last year.
Third-quarter operating profit was $239 million while revenue was $11 billion.
Chief Executive Sergio Marchionne's efforts to revive the company may be paying off.
Although Chrysler has yet to make money this year while U.S. competitors Ford Motor Co. and General Motors Co. have reported surging profits, the third-quarter loss was Chrysler's smallest since its exit from bankruptcy, suggesting that Chief Executive Sergio Marchionne's efforts to revive the company may be paying off.
"A year ago, Chrysler Group laid out clear and concise five-year financial goals, and after three consecutive quarters of better than forecasted results, we are not only living up to our commitments, but we are also exceeding our 2010 financial objectives," Mr. Marchionne said in a written statement Monday. Mr. Marchionne, who is also CEO of Fiat SpA, was given control of Chrysler's day-to-day operations last year.
But Chrysler continues to be squeezed by thin profit margins. The Auburn Hills, Mich., auto maker generated $593 in operating profit for each vehicle produced. Ford generated $2,710 per vehicle in the third quarter, helping the auto maker report a $1.7 billion profit.
Chrysler has redesigned 16 cars and trucks in an effort not only to attract customers but also to sell vehicles at higher prices. Those vehicles are now arriving in showrooms across the country.
For the full-year, the auto maker now expects an operating profit of about $700 million and free cash flow of about $500 million, exceeding the forecast issued a year ago. At that time, Mr. Marchionne said the company would break even on an operating basis or report a $200 million operating profit at the end of this year. He also had forecast negative cash flow of $1 billion.
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Chrysler on Monday forecast 2010 revenue of $42 billion, in the middle of the previous forecast range of $40 billion to $45 billion. Modified earnings before interest, taxes, depreciation and amortization was forecast at $3.3 billion, up from $2.5 billion to $2.7 billion.
Chrysler sold 401,000 cars and trucks world-wide in the quarter, down 1% from the second quarter.
Cash at the end of the third quarter totaled $8.26 billion, up from $7.84 billion at the end of the second quarter, primarily because $400 million in loans from Mexican development banks was fully drawn down. Chrysler still has access to $2.3 billion under loan agreements with the U.S., Canada and Ontario governments. The company's total liquidity was $10.5 billion.
Gross industrial debt was $12 billion at the end of the quarter, accounting for loans and the retiree health-care trust. Net industrial debt was $3.8 billion, up slightly from $3.4 billion at the end of the second quarter.
Net interest expense for the third quarter was $308 million, bringing the year's total to $899 million through September.
About 80% of the auto maker's dealers said they were profitable in the third quarter. Dealers, as a group, have invested about $265 million since June 2009 to upgrade or renovate their showrooms.
