Chrysler reported net losses of nearly $4 billion since it emerged from bankruptcy last year, but it had an operating profit in the first quarter and affirmed that it was on track to break even in 2010.
Chrysler posted a $197 million first-quarter net loss on Wednesday, but it had a $143 million operating profit and its cash flow turned positive due to sweeping cost cuts made during its 2009 bankruptcy.
But the accumulated losses since it emerged from a U.S. government-financed bankruptcy in June under management control of Italy’s Fiat SpA underscored continuing pressure for Chrysler, which has been battling to stabilize U.S. sales while racing to revamp an old, gas-guzzling lineup.
Chrysler posted a $3.8 billion net loss from June 10 through the end of 2009.
IHS Global Insight analyst Rebecca Lindland said Chrysler had done “a very good job on the balance sheet side of the business” including shoring up its cash position.
“But on the product side of the business, Chrysler continues to flounder and they need to address it right away,” Lindland said.
Returning the 85-year-old Chrysler to profitability could pave the way for Fiat to launch an initial public offering of the U.S. carmaker, which was down to its last dollars before some $14 billion in U.S. taxpayer funding. The U.S. Treasury has an 8 percent equity stake.
Chrysler’s turnaround is also critical for Chief Executive Sergio Marchionne‘s plan to spin off Fiat’s carmaking operations from the Italian industrial group’s divisions that make trucks and tractors.