Is Chrysler making profits?
In a time when GM and Ford are reporting huge losses, Chrysler is reporting that they have made money in the first half of this year. Ron Kolka, Chrysler’s Executive Vice President and Chief Financial Officer, said in a conference call today that the company has made $1.1 billion EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). EBITDA is used in researching profitability, but because those who report it can also manipulate it, EBITDA is not an accounting instrument or used in financial reporting. Also Chrysler is a private company, and it can choose the financial data it wants to release to the public. Although it does not represent actual cash earnings or cash flow, this is welcomed news in the struggling U.S. auto industry.
When asked why Chrysler was able to be in the black when the its cross-town rivals are in the red, Kolka responded, “We got a head start.” He is referring to the reduction of 1.1 million vehicles produced, as well as 22,000 hourly and 4,000 salaried employee layoffs that the company started last year.