Chrysler earnings tumbled 27% in quarter But $1.19 a share better than predicted

Auto industry

January 24, 1998|By BLOOMBERG NEWS

AUBURN HILLS, Mich. -- Chrysler Corp.'s fourth-quarter earnings fell 27 percent, less than expected, as the company idled factories to convert to new models and offered discounts to fend off new competition for its minivans and other vehicles.

The country's third-largest automaker said profit before special items fell to $792 million, or $1.19 a diluted share, from $1.09 billion, or $1.51 a diluted share, in the year-earlier period. The earnings topped the $1.13-a-share average estimate of analysts surveyed by IBES International Inc.

The decline, Chrysler's third straight quarterly drop, resulted in a 19 percent earnings decrease for the year. That's expected to be the worst performance among the three U.S. automakers, a reversal from recent years when Chrysler outdid its Detroit rivals. The company lost market share as well.

Chrysler, the first U.S. automaker to report fourth-quarter earnings, beat the estimates in part because it changed its pension accounting. That boosted per-share earnings 9 cents a share, said Nicholas Lobaccaro, a Merrill Lynch automotive analyst.

Revenue rose 8 percent to $17.5 billion in the fourth quarter from $16.2 billion.

The company's automobile business ended the year with cash of $7.1 billion, up from $6.9 billion at the end of 1996, even though it spent $2.2 billion to repurchase shares.

After a gain of $60 million, or 9 cents a diluted share, in the latest quarter, Chrysler's net income was $852 million, or $1.28 a diluted share. In the year-ago period, charges of $279 million, or 39 cents, resulted in net income of $807 million, or $1.12 a diluted share.

U.S. companies now report per-share earnings two ways: diluted, which reflects options, warrants and other securities convertible into common stock, and basic, which doesn't reflect them. Chrysler's basic earnings before special items was $1.21 a share a share in the fourth quarter, down from $1.53 in the year-ago period.

For the year, profit from operations fell to $3.13 billion, or $4.57 a diluted share, from $3.88 billion, or $5.21 a share, in 1996. Revenue declined by 0.5 percent to $61.1 billion from $61.4 billion.

The automaker's 79,250 hourly and salaried employees will receive profit-sharing checks in February that will average $4,600, down from $7,900 last year. These checks would be $1,000 higher if the United Auto Workers hadn't staged a 29-day strike last spring, the company said.

Pub Date: 1/24/98

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