Chrysler Hikes Profit 16% But Lowers Outlook

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Chrysler Group LLC’s net earnings climbed to $507 million in the second quarter of this year from $436 million in the same period of 2012.

But Chrysler trimmed its full-year forecast to a net profit ranging from $1.7 billion to $2.2 billion from its earlier prediction of $2.2 billion. The company cites production difficulties and recall costs.

Quarterly revenue rose 7% to $18 billion. Global vehicle sales jumped 10% to 643,000 units. Chrysler’s U.S. market share grew 0.2 points from a year earlier to 11.4%.

Modified operating profit increased 7% to $808 million in the April-June period. The company says higher wholesale deliveries and improved pricing were partly offset by the expense of new-model launches and a $151 million charge for the recall of 1.6 million Jeeps in the quarter.

CEO Sergio Marchionne attributes Chrysler’s more cautious 2013 outlook to delays in launching several new models, including the Jeep Cherokee SUV. Marchionne says the company is paying a “huge price” for the lapse in volume since the previous-generation Cherokee went out of production last August. The twice-delayed new model isn’t scheduled to arrive until September.

Marchionne adds that Chrysler lost production volume for existing vehicles on a “steady basis” in the first half because of parts shortages. The company still expects to meet its full-year goal of shipping 2.6 million vehicles by building and selling 150,000 more vehicles from July through December than it did in the previous six months.

Chrysler generated $91 million in free cash flow during the quarter and held $11.9 billion in cash on June 30. The company’s automotive debt reached $656 million, up 6% from March 31 and 52% from a year earlier.