Chrysler has forecast a return to profit for 2011as it gears up for an initial public offering in the second half of the year and launches an array of new and revamped models to stimulate its recovery.
The automaker, which is managed and 25 percent owned by Fiat, on Monday projected net income between $200 million and $500 million (R1.5 billion-R3.5 billion) for 2011. It expects its 2011 revenue to jump by nearly a third to $55 billion (R390 billion).
Chief executive Sergio Marchionne has said Chrysler must report a “couple” of quarters of net income before its expected IPO in 2011. The company must also refinance high-interest government loans for lower-cost debt before a public offering.
Chrysler, the No.5 carmaker by sales in the US, emerged from a US government-funded bankruptcy in mid-2009.
The key to Chrysler's revival will be the commercial success of its 16 new and revamped models, including the 2011 Jeep Grand Cherokee and Chrysler 300 sedan.
Chrysler has been criticised for its reliance on bulk sales to rental agencies, governments and businesses. Such sales are typically less profitable than sales to consumers. But fleet sales fell in the fourth quarter compared with both the third quarter of 2010 and the final quarter of 2009.
Retail sales to consumers are likely to jump in 2011 due to Chrysler's spruced-up vehicle portfolio.
IHS Automotive analyst Rebecca Lindland said: “From a long-term investor standpoint, the banks that are going to refinance their debt prefer to see a higher retail rate.”
Chrysler is the only one of Detroit's big Three carmakers that has not yet returned to profitability; last week, Ford reported its best annual profit since 1999.
Marchionne noted that Chrysler's recovery had so far bettered industry expectations but added that the company was still a long way from meeting its objectives.
“Our job is not yet done,” he said. “We have a lot of work ahead to fulfill our five-year business plan objectives.” - Reuters