Chrysler Group LLC on Monday reported a $690 million loss for its first quarter on expenses related to a debt payment and a charge-to-earnings stemming from its purchase by Italy's Fiat SpA in January.
The Auburn Hills, Mich., auto maker is owned by Fiat but still releases its profit and sales separately as a result of debt requirements. It posted a net profit of $166 million in the same year-ago period. Revenue for the quarter ended March 31 rose 23% to $19 billion, and world-wide sales were up 10% to 621,000 units.
Chrysler's results come less than a week after newly renamed parent Fiat Chrysler Automobiles NV revealed an ambitious new five-year plan that aims to vastly expand the U.S. auto maker's lineup and transform its iconic Jeep brand into a global player.
Its first-quarter performance was dragged down by $1.2 billion in charges, including a $504 million noncash loss on the payment of a note issued to a United Auto Workers union health-care trust. The company retired the note in February and issued new debt with a lower interest rate.
Chrysler also took a $672 million charge to fulfill commitments made to the UAW as part of a $4.35 billion deal Fiat struck in January with the union's health-care trust to buy the 41.5% part of Chrysler it didn't already own.
The charge reflects a total of four equal installment payments to be made each year to the union for support of manufacturing programs at Chrysler plants. The first payment was made in the first quarter.
Excluding the charges, Chrysler would have earned $486 million in the quarter.
Chrysler confirmed its guidance for the full year, including net income of between $2.3 billion and $2.5 billion, revenue of about $80 billion and world-wide shipments of about 2.8 million vehicles.
"We're going to have a back loaded second half," said Richard Palmer, Chrysler's chief financial officer, citing the phased roll out this summer of a new Chrysler 200 midsize sedan.
The 200, Chrysler's first all-new midsize car in years, began shipping about a week ago but it isn't expected to hit showrooms in volume until the third quarter, he said.
The earnings report is Chrysler's first since it was fully acquired by Fiat, creating the world's seventh-largest auto maker.
Chief Executive Sergio Marchionne last week confirmed the newly-combined company would have its headquarters in London and its shares listed on the New York Stock Exchange later this year.
For the last couple of years, Chrysler has been driving profits for Fiat. Chrysler's sales have risen sharply amid a rebounding U.S. auto market and popular new models like the Jeep Grand Cherokee.
The Italian auto maker earlier this month reported a loss of €319 million ($444 million) in the first three months of the year, compared with a net profit of €31 million a year earlier. The Fiat loss included one-time costs connected to the payoff of the UAW trust note and currency turmoil in Venezuela. Without those costs, Fiat said it would have earned €71 million.
Chrysler generated about $900 million in free cash flow for the first quarter but also paid a special $1.9 billion distribution payment in connection with Fiat's acquisition deal.
At the end of March, it had $12.4 billion in cash, down from $13.3 billion at the end of 2013.
For 2014, the auto maker projects free cash flow of between $500 million and $1 billion, down from $2.1 billion last year.
Chrysler's quarterly modified operating profit grew to $586 million, or 3.1% of net revenue, up 35% from the same year-ago period.
Last year, Chrysler reported a 65% drop in its first-quarter profit, the result of higher costs related to new-model rollouts and a drop in shipments as it idled certain plants to prepare for building new vehicles.
In all, Chrysler earned $2.8 billion in 2013, as sales increased with the arrival of a new Jeep Cherokee sport-utility vehicle and because of a $962 million noncash tax benefit booked in the fourth quarter.
