Charges from Fiat Merger Hampers Chrysler's Q1 Results

On Monday, Chrysler Group reported first quarter 2014 results. The company lost $690 million in the first quarter due to charges related with the Fiat S.p.A. merger.

In the January through March period, Chrysler lost $690 million, with one-time charges related to the Fiat merger. Fiat paid $3.65 billion to a union-run health care trust to acquire Chrysler's remaining shares. Chrysler agreed to pay $700 million to upgrade its factories. The press release states, “Chrysler took a $672 million charge in the first quarter to meet those commitments. It also booked a $540 million non-cash loss on extinguishment of debt related to the merger.”

The Michigan based company saw adjusted net income over doubling from 2013 to $486 million. Chrysler reported $19 billion in revenue, up 23 percent from a year ago. For the quarter, worldwide vehicle sales totaling 621,000. Worldwide shipments were up 16 percent from 2013 at 668,000. International vehicle sales grew 18 percent from 1Q13 to 79,000, including 14,000 vehicles manufactured by Chrysler and sold by Fiat. Modified operating profit came in at $586 million in the first quarter versus $435 million from last year. Chrysler saw $919 million in free cash flow, compared with $449 million in 2013. As of March 31, 2014, cash totaled $12.4 billion. The company saw strong sales for the new Jeep Cherokee SUV and the Ram pickup truck. Chrysler's U.S. sales rose 11 percent, versus the average 1 percent gain for the industry. U.S. dealers' days' supply of inventory at the end of the first quarter was 71 days, versus the 79 days at the end of December 2013 and 66 days at the end of 1Q13.

Chrysler expects worldwide vehicle shipments for the year of approximately 2.8 million. Management expects net revenue of modified operating profit of roughly $80 billion and $3.7-$4.0 billion, respectively. The company sees adjusted net income of $2.3-$2.5 billion and free cash flow of $0.5-$1.0 billion.