Thursday, October 23, 2008

Chrysler announces cuts, explains loss

Daimler reports $273-million 3Q profit


Chrysler indicated early this morning that it had a net loss of $662 million in the second quarter of this year and also announced it will close its Newark, Del., Assembly Plant earlier than expected and eliminate a shift at its Toledo North Assembly Plant.The shift reduction in Toledo will occur Dec. 31 and affect about 825 jobs. The Newark plant was already slated for closure at the end of 2009 but will now close Dec. 31, 2008, affecting 1,000 jobs.

Chrysler said in a statement that it is committed to working with the UAW “to address the represented manpower reductions in a socially responsible manner” and will hold meetings with employees to review special programs for the affected locations.

The bulk of the $662-million losses — $572 million — were attributed to the automotive business.

Combined with previous statements, today's announcement indicates that Chrysler's automotive and financing businesses lost $1.17 billion though the first half of the year. During the same time, Ford Motor Co. lost $8.6 billion while General Motors Corp. lost $18.7 billion.

The Auburn Hills automaker gave the guidance on its second-quarter numbers in response to public filings today by minority partner Daimler AG, which said it lost 351 million euros — or $528 million using an average third-quarter exchange rate of $1.505 — on its 19.9% stake of Chrysler.

Chrysler’s results show up in a three-month delay in Daimler’s quarterly report. Overall, Daimler said it had a net profit of 213 million euros — $321 million — during the third quarter.

Since Chrysler became privately held and not required to make public its finances, it’s disputed Daimler’s quarterly reports on how much the German automaker was losing on Chrysler. Chrysler officials say the figures are not accurate reflections of Chrysler’s business because of the difference between International Financial Reporting Standards used by Daimler and the U.S. accounting standards used by Chrysler.

Chrysler issued a statement that said under U.S. standards Daimler’s losses would be 88 million euros — or $132 million — in the second quarter. While Chrysler does not say how much money it lost as a whole, simple math would say the automaker and its financing arm, Chrysler Financial, lost $662 million.

Chrysler issued a similar clarification in July that indicated Chrysler and its financial arm lost $509 million during the first quarter of this year.

Then in August, Chrysler executives said the automaker had $11.7 billion in cash and marketable securities on hand at the end of June and that it earned $1.1 billion before interest, taxes, depreciation, amortization - known as EBITDA - and before restructuring charges during the first half.

Today’s results come as Chrysler owner Cerberus Capital Management is in talks with GM about a potential merger of the automakers. Renault-Nissan are also interested in a partnership with Chrysler.

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