The Company ended Q2 2010 with an Operating Profit(a) of $183 million and a first half 2010 Operating Profit of $326 million.
"The second quarter operating profit confirms that Chrysler Group is on track to achieve its goals, yet an extraordinary amount of work still lies ahead," said Sergio Marchionne, Chief Executive Officer, Chrysler Group LLC. "Customer traffic in our dealerships and confidence in the Company's future continued to grow with the launch of the all-new 2011 Jeep® Grand Cherokee, one of the signature vehicles for Chrysler Group. The Grand Cherokee sets the standard for this Company to produce high quality, technologically advanced vehicles.
"2010 is seen as a year of transition and stabilization. With most of our 16 all-new or refreshed products launching later this year, including the all-new Chrysler 300, Dodge Charger, Dodge CUV, the iconic Fiat 500, and the Chrysler Sebring replacement, Chrysler Group must continue to be rigorous, disciplined and focused on the task at hand," Marchionne said.
The Q2 2010 Operating Profit improvement of $40 million, compared to Q1 2010, was driven primarily by continued volume increases. This improvement was partially offset by the impact of the Jeep Grand Cherokee changeover and moderate increases in incentive programs. Industrial costs increased due primarily to the ramp-up of ER&D expenses for the new product offensive starting in the second half of the year, partially offset by continued manufacturing efficiencies.
Modified Earnings Before Interest, Taxes, Depreciation and Amortization (Modified EBITDA)(a,b) was $855 million, or 8.2 percent of Net Revenue, a $68 million increase from Q1 2010; first half 2010 Modified EBITDA was $1,642 million.
Net Interest Expense in Q2 2010 was $296 million, including a non-cash interest accretion of $58 million. Net Interest Expense was $591 million for the first half of 2010.
Net Loss in Q2 2010 was reduced to $172 million as compared with $197 million in Q1 2010, driven by the increase in Operating Profit. Net Loss for first half 2010 was $369 million.
Cash(c) at the end of June 2010 was $7,841 million compared to $7,367 million at the end of Q1. An additional $2.3 billion remains available to be drawn under Chrysler Group's U.S. Treasury (UST) and Canadian and Ontario government loan agreements, bringing total available liquidity above $10 billion.
Gross Industrial Debt(d) at June 30, 2010 remained at $11.2 billion. Net Industrial Debt(d) improved to $3.4 billion, as a result of positive cash flow of $474 million.
Worldwide vehicle sales were 407,000 units for Q2 2010, an increase of 22 percent compared to 334,000 units in Q1 2010, with all brands posting gains. U.S. market share improved to 9.4 percent in Q2 2010 from 9.1 percent in Q1 2010. In addition, Canadian market share was a strong 12.9 percent as a result of sales increasing 32 percent versus Q1 2010. Throughout the quarter, sales showed steady growth as brand repositioning efforts and investments in marketing campaigns continued to drive increased customer traffic into dealership showrooms.
Worldwide vehicle shipments in Q2 were 433,000, representing an increase of 14 percent versus Q1 2010. U.S. vehicle shipments totaled 305,000, representing an increase of approximately 16 percent versus Q1 2010.
Chrysler Group maintained a U.S. dealer inventory level consistent with its higher sales performance, increasing from 208,000 vehicles at Q1 2010 to 222,000 vehicles on June 30. Days supply increased slightly to 60 days (from 58), ensuring that Chrysler dealers will be able to service customers during the model year changeover period.
Significant Events: Second Quarter and Subsequent to June 30, 2010
On May 21, the Company celebrated the production launch of the all-new 2011 Jeep Grand Cherokee at the Jefferson North Assembly Plant (JNAP). Concurrently, Chrysler Group announced the addition of a second shift of production with about 1,100 employees hired. In preparation for the new product, JNAP went through a complete transformation as part of World Class Manufacturing, taking the plant to world class levels of flexibility and competitiveness.
The Jeep Grand Cherokee quickly garnered widespread global opinion-leader accolades and also received the "Top Safety Pick" award from the Insurance Institute for Highway Safety (IIHS) – the highest rating the organization bestows.
On July 30, more than 1,500 UAW-represented employees welcomed President Obama to JNAP. The President visited the plant to see a company on the road to recovery and to congratulate employees for their contributions to Chrysler Group's success.