July 30, 2012 / 4:58 PM / 5 years ago

UPDATE 3-Chrysler earns $436 mln in quarter, confirms outlook

* Chrysler 2nd-quarter revenue rises 23 percent

* Worldwide vehicle sales up 20 percent

* Marchionne to employees: stay humble

* Dodge Dart rolling out to dealers now

By Bernie Woodall

DETROIT, July 30 (Reuters) - Chrysler Group LLC continued its turnaround from near death just three years ago, earning $436 million in the second quarter and confirming that it will show a full-year operating profit of at least $3 billion.

Chief Executive Sergio Marchionne, in an email to Chrysler’s employees on Monday, warned against overconfidence in the face of the company’s recent success after “living through a near-death experience” in 2009.

“History teaches that it is easy to develop bad habits during good times,” wrote Marchionne, who is also CEO of Chrysler’s majority-owner Fiat SpA.

“This is no time to cut corners, no time to become undisciplined in our execution, no time to forget how difficult it was to claw our way back to viability,” said the email, a copy of which was obtained by Reuters.

A year ago, Chrysler lost $370 million in the second quarter, including losses related to $551 million in payments of government loans related to its 2009 bankruptcy and bailout.

Second-quarter revenue rose 23 percent to $16.795 billion.

Rebecca Lindland, analyst with IHS Global Insight, said the fact that Chrysler had $12.075 billion in cash at the end of the quarter emphasizes the vast improvement of the company since 2009.

“They are not burning through cash anymore,” Lindland said. “It shows that from an operating and structural standpoint, they really have made some significant systemic improvements. The changes they have made can lead to long-term improvement in the company.”

Fiat reports second-quarter earnings on Tuesday. In the past several quarters, its weak earnings have been boosted by the strength of Chrysler. Marchionne will elaborate on Chrysler’s earnings during a Tuesday conference call with reporters and investors.

Fiat’s earnings have been pressured by the economic crisis in Europe. Also, it relies heavily on southern European markets where sales have been hit the hardest.

Chrysler’s global vehicle sales rose 20 percent, to 582,000 in the second quarter, led by a 24 percent rise in U.S. sales. Sales outside its core market in North America rose 58 percent to 70,000 vehicles in the quarter.

Earlier this month, Fiat announced its intention to exercise its call option to purchase another 3.3 percentage points of Chrysler, raising its stake to 61.8 percent once that deal has been done. Neither Fiat nor Chrysler have yet indicated that the deal has been sealed.

The remaining shares of Chrysler are owned by a retirees’ healthcare trust administered by the United Auto Workers union.

Earlier this month, Marchionne said of the full-year operating profit: “The objective of $3 billion is close at hand. We could overshoot it.”

Sales have steadily climbed for Chrysler since the first quarter of 2010, when it began breaking out its financial results from Fiat. At that time, Chrysler’s revenue was $9.69 billion.

Through June, Chrysler has reported 27 consecutive months of year-on-year sales growth in the U.S. market. That streak followed about 24 consecutive months of U.S. sales decreases.

Marchionne and his leadership team are credited with overhauling Chrysler’s vehicle lineup which was outdated and panned in quality surveys and reviews when Fiat took management control in 2009.

Chrysler is now ramping up sales for its new Dodge Dart small sedan which competes in the compact segment of the U.S. auto market -- a crowded segment that includes Honda Motor Co’s Civic, Toyota Motor Corp’s Corolla, Ford Motor Co’s Focus and General Motors Co’s Chevrolet Cruze.

The Dart is the first vehicle to be jointly developed by Fiat and Chrysler.

Fiat took management control and a 20 percent ownership stake in Chrysler as part of the bankruptcy restructuring in 2009 that saved the Auburn Hills, Michigan, automaker from extinction.

Chrysler’s cash at the end of the second quarter increased to $12.075 billion from $10.175 billion a year ago and from $11.3 billion at the end of the first quarter. Total available liquidity at the end of the second quarter was $13.4 billion.

Free cash flow was $866 million at the end of the second quarter, down from $1.7 billion at the end of the first quarter, and up from $174 million a year ago.

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