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Chrysler Reports Some Healthy Results : Earnings: But a massive one-time charge for retiree health benefits wipes out the gains.

April 20, 1993|From Associated Press

HIGHLAND PARK, Mich. — With a new line of cars and a fresh dose of cost cutting taking hold, Chrysler Corp. reported a strong gain in some key financial results on Monday.

Profit from Chrysler's operations reached $530 million, a healthy performance obscured by a $4.7-billion, one-time cost to account for future retiree health benefits.

The non-cash accounting charge, which all companies have to record, resulted in a loss of $4.15 billion, or $12.81 a share, for the No. 3 auto maker.

Before the accounting change, Chrysler's per share earnings were $1.57.

In the first quarter of 1992, Chrysler lost $13 million, or 7 cents a share, including one-time gains for income tax accounting changes and the sale of $88 million in Mitsubishi Motors Corp. stock.

Chrysler's first-quarter sales were $10.9 billion, up 33% from $8.19 billion in the first quarter last year.

"We're pretty pleased with the results and looking forward to the spring market," said Corporate Controller Jim Donlon. "This was done with winter weather and a blizzard. We're hopeful we can move on from here."

Lehman Bros. analyst Joseph Phillippi said Chrysler's first-quarter earnings may be its highest of the year. The auto maker expects its production capacity to shrink by 30,000 trucks this quarter when it retools its Dodge City plant in Warren for the new T-300 full-size pickup.

The third quarter could bring even skimpier profit because factories in Newark, Del.; Belvidere, Ill., and Toledo, Ohio, will each lose several weeks of production for model changeovers.

"We'll have a quarter here and there where we have to pause for a little while and get things switched over," Donlon said. "In the long picture, that's a very good thing for us to do."

Donlon said the combination of cost-cutting and having the right product at the right time led to the healthy first quarter.

Among the showroom winners: the Jeep Grand Cherokee, Chrysler minivans, Dodge Dakota pickup and the Dodge Intrepid, Eagle Vision and Chrysler Concorde mid-size cars.

Chrysler has shed thousands of jobs in recent years while assigning its designers, engineers, financial analysts and marketers to particular auto types similar to Japanese auto makers.

While analysts were impressed with Chrysler's report, its stock finished down $1.75 a share at $42 on the New York Stock Exchange Monday after closing Friday at a record high of $43.75.

The quarter left Chrysler with $5.1 billion in cash and marketable securities, up from $3.35 billion a year ago.

More earnings reports, D6.

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