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Marchionne upbeat, says Chrysler stock sale may be earlier

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Marchionne upbeat, says Chrysler stock sale may be earlier

Alisa Priddle / The Detroit News

Chrysler Group LLC may raise its financial targets for the full year in September and take the company public sooner if the automaker's performance and market conditions continue to improve, CEO Sergio Marchionne said today.

Marchionne held a conference call with investors to provide more details of previously released first-quarter earnings. In April, Chrysler said it achieved an operating profit of $143 million for the first three months. It was the first published financial results since June 10, when Chrysler emerged from bankruptcy and formed a partnership with Fiat SpA.

Marchionne sees the quarterly results as a good base, given that global shipments of vehicles were below projected levels and the automaker was still able to generate cash and reduce its debt.

Chrysler has forecast 1.6 million-1.7 million worldwide sales for 2010, revenue of $40 billion to $45 billion and operation profit up to $200 million. Marchionne said the company breaks even if it sells 1.65 million vehicles.

But if Chrysler continues at its current pace, it could "blow the lid off that number," he said.

The strength of the first-quarter results, which Marchionne described as "a surprise to most humans," provides a financial base for looking at an initial public stock offering "sooner than most think" depending on the automaker's continued progress and market conditions.

Chief Financial Officer Richard Palmer was making necessary preparations to ensure Chrysler meets all requirements, so when the time is right, Chrysler will be able to push the button on an IPO, Marchionne said.

The automaker also is looking at ways to refinance some of its government loans with more attractive means of financing, he said.

Going forward, Chrysler hopes operating profits will remain above zero each quarter. Marchionne said he expects the best results in the second and fourth quarters, followed by the third quarter. The first three months were expected to post the worst results, because new product launches are heavily weighted to the end of the year.

Marchionne wants to see how well the new Jeep Grand Cherokee -- production began in Detroit this weekend -- does before adjusting any financial targets. The Grand Cherokee will go on sale next month.

The CEO also said Chrysler is comfortable with its 58-day supply of inventory and will work to maintain that level, which means staying away from "incredibly aggressive incentives of the past," he said, that "reflect pathetic conditions we are determined to avoid."

"I don't want to be the biggest carmaker in the world. I just want to be the most profitable one," Marchionne said.

In the first quarter, Chrysler reported net revenue increased 3 percent to $9.687 billion. Cash and market share also improved on heels of a net loss of $3.785 billion for 2009, (from June 10 to Dec. 31).



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