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U.S. automaker Chrysler Group LLC swung to a full-year net income of $183 million US on Wednesday, and made the bold prediction that profit would be eight times higher in 2012, on strong sales in its main U.S. market.
In its second full year managed by Italy's Fiat SpA and its hard-charging chief executive Sergio Marchionne, Chrysler turned a net profit of $183 million, up from a loss of $652 million in 2010. The company set a target for about $1.5 billion in net profit in 2012.
Chrysler 2011 sales reached $54.98 billion, a 31-percent rise from 2010, linked closely to strong sales in its home U.S. market.
Marchionne, also the CEO of Chrysler, said of the Detroit-area automaker, "Our house is in good order."
Later on Wednesday, Marchionne will address the state of the larger Fiat, which also reports quarterly and annual results.
Fiat took control of the third-biggest U.S. automaker in 2009 as part of a government bailout.
Last year was the first time a company named Chrysler reported a net income since 1997, when the company showed a net profit of $2.8 billion.
From 1998 until 2007, as a unit of Daimler AG, Chrysler reported only an operating profit or loss, and last posted an operating profit in 2005, at $1.8 billion. It did not post profits when from 2007 to 2009 when it was owned by private equity firm Cerberus Capital Management.
SHORING UP FIAT
As European auto sales sink amid a sovereign debt crisis, it is Chrysler that is now shoring up Fiat. In the third quarter, Chrysler made up two-thirds of Fiat's profit.
Net income for the fourth quarter of $225 million was the largest net profit since the new Chrysler was formed after its 2009 bankruptcy and restructuring.
The company said full-year 2011 adjusted net income would have been $734 million excluding a $551 million charge linked to Chrysler's repayment in May of U.S. and Canadian government loans.
Chrysler also said it was targeting an 18-percent jump to about $65 billion in revenue in 2012. It also said its modified operating profit was targeted to reach at least $3 billion in 2012, about 50 percent higher than in 2011.
The higher profit would come, Chrysler said, from a nearly 30-percent jump in company global auto sales to 2.4 million vehicles from 2011's 1.86 million.
While Chrysler is working to expand its sales base beyond North America -- a stipulation of its bailout -- about 85 percent of its 2011 sales came from the United States and Canada.
Chrysler said it expected to gain cost savings in 2012 because it has fewer costly vehicle launches than it had in 2011 or will have in 2013. Its annual profit was a result of the spate of new or freshened products launched in 2010 and 2011, such as the Jeep Grand Cherokee and the Chrysler 200 sedan.
A key launch this year will be the Dodge Dart small sedan, built in Illinois on a platform from Fiat brand Alfa Romeo.
While Chrysler made strides in 2011 it still lags far behind cross-town rivals General Motors and Ford.
Ford posted a 2011 pre-tax operating profit of $8.8 billion and GM posted operating profit of $7.7 billion in the first three quarters.
On Tuesday, Fiat Chairman John Elkann said the sovereign debt crisis in Europe was "even bigger" than the 2008-2009 financial crisis that led to Chrysler's near-death experience and its partnership with Fiat.
Elkann said Italian auto sales would be as low in 2012 as they were in 1985, which he said, "requires us to rethink again, very carefully, what we can do and how we will move forward."
Marchionne issued similar warnings last month at the Detroit auto show, saying the Fiat Group was open to a third partner to help it reach its 2014 sales target of selling 6 million vehicles.
In December, Marchionne said the third partner could be added before a Chrysler IPO, which he said was possible in 2013.
Fiat raised its ownership stake of Chrysler in January to 58.5 percent. The remaining 41.5 percent is owned by the retiree healthcare trust affiliated with the United Auto Workers union.