Chrysler projects profitable 2011 ahead of IPO

(Reuters) - Chrysler Group LLC forecast a return to profit for 2011 as it gears up for an initial public offering in the second half of the year and launches an array of new and revamped vehicle models to stimulate its recovery.

The automaker, which is managed and 25 percent owned by Fiat SpA, on Monday projected net income between $200 million and $500 million for 2011. It expects its 2011 revenue to jump by nearly one-third to $55 billion.

Chief Executive Sergio Marchionne has said Chrysler must report a "couple" quarters of net income before its expected IPO this year. The company must also refinance high-interest government loans for lower-cost debt before a public offering.

Chrysler, the No. 5 automaker by sales in the United States, emerged from a U.S. government-funded bankruptcy in mid-2009.

The key to Chrysler's revival will be the commercial success of its 16 new and revamped models, including the 2011 Jeep Grand Cherokee and the Chrysler 300 sedan.

Chrysler has been criticized for its reliance on bulk sales to rental agencies, governments and businesses. Such sales are typically less profitable than sales to consumers.

But fleet sales fell in the fourth quarter compared with both the third quarter 2010 and the year-ago period, according to Chrysler and industry tracker TrueCar.com.

Retail sales to consumers are likely to jump in 2011 due to Chrysler's spruced up vehicle portfolio, IHS Automotive analyst Rebecca Lindland said.

"From a long-term investor standpoint, the banks that are going to refinance their debt prefer to see a higher retail rate," Lindland said.

Chrysler is the only one of Detroit's Big Three automakers that has not yet returned to profitability.

Last week, Ford Motor Co reported its best annual profit since 1999. Analysts on average project that General Motors Co will report earnings per share of $2.90 for 2010, according to Thomson Reuters I/B/E/S.

Chrysler has blamed high interest rates on $7.4 billion in loans from the U.S. and Canadian governments for its net losses. The company paid $1.23 billion in interest in 2010.

"NOT YET DONE"

For 2010, Chrysler reported nearly $42 billion in revenue, in line with its November financial projections. The company's annual operating profit of $763 million, topped its November outlook of about $700 million.

For 2011, the company projects about $2 billion in operating profit.

The automaker's U.S. market share last year was 9.2 percent, up from 8.8 percent in 2009. The company aims to achieve more than 13 percent market share in the United States by 2014, according to its 2009 turnaround plan.

Chrysler reported a $199 million net loss for the fourth quarter. Excluding those expenses, Chrysler reported an operating profit of $198 million, reversing a $267 million operating loss for the same period a year earlier.

Its fourth-quarter revenue was $10.76 billion, up 14 percent from the year earlier.

Chrysler's global sales last year topped 1.5 million cars and trucks, buoyed by a new models, including the updated Jeep Grand Cherokee.

In the fourth-quarter, Chrysler's average transaction price rose 2.8 percent compared to the year-ago period, while incentives rose 0.6 percent, according to TrueCar.com.

Marchionne noted in a statement that Chrysler's recovery has so far bested industry expectations, but he added that the automaker was still a long way from meeting its objectives.

"Our job is not yet done," Marchionne said in a statement. "We have a lot of work ahead to fulfill our five-year business plan objectives."