Chrysler Corp. Rides Strong Car, Truck Sales To Record Profits In ‘94

Strong sales of cars and trucks and sharply reduced spending on marketing helped make 994 the most profitable year in Chrysler Corp.’s history, the automaker said Tuesday.

The No. 3 U.S. automaker’s $3.7 billion earnings will translate to fat profit-sharing checks or bonuses for its employees, and position the company for growth until at least 1997, Chairman Robert J. Eaton said.

Chrysler earned $1.2 billion in profits in the fourth quarter, compared with $777 million in the October-December period of 1993. The fourth-quarter earnings reflected a favorable tax adjustment of $132 million.

The previous Chrysler earnings record for a year was $2.4 billion in 1984. In 1993, the company had a net loss of $2.5 billion, as accounting changes that year produced a onetime reduction in earnings of nearly $5 billion.

Chrysler’s stock fell Tuesday despite its record 1994 earnings. The automaker’s shares lost $1.25 to close at $51.62 on the New York Stock Exchange.

The formula for the company’s success in 1994 included:

Sharply reduced spending on rebates and other incentive programs, which averaged $570 per vehicle vs. $870 in 1993.

Continuing cost-cutting and waste elimination programs that from 1989 through 1993 saved the company $4 billion. Chrysler Chief Financial Officer Gary Valade said savings in 1994 were between $750 million and $1 billion.

A higher profit margin on cars and trucks, due to the cost savings. After taxes, Chrysler’s average profitper-vehicle rose to $1,230 in 1994 from $820 in 1993.

Increasing sales, both at home and overseas. U.S. sales were up 7.6 percent while international business grew 20 percent.

Chrysler’s earnings-per-share were $3.20 for the fourth quarter and $10.11 for the year, compared with earnings of $2.11 and a loss of $7.62 in the respective 1993 periods. Its 1994 revenues were $52.2 billion, up from $43.6 billion in 1993. Fourth-quarter revenues were $14.3 billion vs. $12 billion a year ago.

In other earnings reports:

Intel Corp. took a $475 million fourth-quarter charge to replace its flawed Pentium microprocessors, a move that dragged down profits 37 percent.

But strong demand for the Pentium and Intel’s 486 chip during the holiday season pushed up revenue 35 percent.

Intel, the world’s largest maker of computer chips, earned $372 million, or 86 cents a share, for the three months ended Dec. 31, compared with $594 million, or $1.35 cents a share, for the final quarter of 1993.

Revenue was $3.23 billion, up from $2.39 billion a year ago. It was the first time Intel’s quarterly revenue exceeded $3 billion.

The company said the one-time charge, amounting to 70 cents a share, should be enough to cover all costs stemming from replacing the early versions of the Pentium chip that had a flaw that causes them to botch some obscure division calculations.

For 1994, the charge reduced Intel’s profit by less than one percent. The company earned $2.288 billion, or $5.24 cents a share, compared with $2.295 billion, or $5.20 cents a share.

Weyerhaeuser Co. posted an 86 percent increase in its fourthquarter profit as its pulp and paper products business swung back to profitability.

The timber products company earned $188.9 million, or 91 cents a share, in the three months ended Dec. 26 compared with $101.7 million, or 50 cents a share, a year earlier.

Quarterly sales rose to $2.73 billion from $2.59 billion in 1993.

President John W. Creighton Jr. said continuing improvement in pulp, paper and packaging profits, along with strong timber values and efficiency efforts would significantly improve earnings this year.

For the year, Weyerhaeuser earned $588.7 million, or $2.86 per share, up 2 percent from $579.3 million, or $2.83 per share, in 1993.

Sales for the year rose to $10.4 billion from $9.54 billion in 1993.

Honeywell Inc. reported a 6.8 percent fourth-quarter earnings decline and a 13 percent drop for the year, hurt by weakness in the company’s space and aviation control business.

Fourth-quarter earnings decreased to $104.9 million, or 81 cents per share, from $112.6 million, or 85 cents per share, a year earlier. Sales in the final quarter were $1.74 billion, compared with $1.62 billion a year earlier.

The Minneapolis-based controls and instruments maker said earnings for 1994 were $279 million, compared to $322 million in 1993.