Chrysler’s Outlook Upgraded From ‘Stable’ to ‘Positive’ by S&P image

Chrysler might see its credit rating upgraded in the following year, after Standard and Poor’s upgraded the automaker’s outlook from ‘stable’ to ‘positive.’

S&P upgraded Chrysler’s outlook even if the automaker reported on Monday a 65% fall in the first quarter profit. The company’s corporate rating remained the same at B+, but it could be increased if Chrysler’s stand-alone performance will continue to improve and if majority owner Fiat’s credit rating remains at BB-.

“The outlook revision reflects our expectation that Chrysler will continue to grow revenue and improve profitability, in spite of weaker first-quarter results, which were hurt by product launches, and assuming a continuation in the North American light vehicle industry recovery,” S&P said.

Although S&P credit the Italian automaker for its product and management integration with Chrysler and for making it more credit worthy, it is thanks to Chrysler’s improving sales in North America that Fiat was able to avoid financial losses in the weak European auto market.

Chrysler’s net income for the first quarter dropped to $166 million, compared with $473 million during the same period last year, and net revenue also fell 6% to $15.4 billion. The US automaker said it sees net revenue this year to be between $72 billion to $75 billion, due to an expected strong second half. Chrysler also predicts free cash flow surpassing $1 billion.

Source: Reuters