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Automobile industry

Chrysler Raises Dividend and Pledges to Fully Finance Pensions

Strategic Insights

— 2 min read

Chrysler Corporation, following a string of record earnings and anticipating a strong growth in the North American auto market, has announced a 25-cent quarterly dividend, up from 20 cents, and pledged to fully finance its pension plan by the end of the year. This move marks a significant shift in the company's financial strategy, with Chrysler's chairman and CEO, Robert J. Eaton, attributing the decision to its strong cash flow and the continued growth of the auto market. Moody's Investor's Service has responded by raising its rating of Chrysler's senior debt and preferred stock, citing the company's "conservative financial policy" and improving product mix.

Key Takeaways:

  • Chrysler will raise its quarterly dividend to 25 cents, up from 20 cents, and has fully financed its pensions by the end of the year, making it the first time in its history that the company has achieved this milestone.
  • The company plans to contribute $1.8 billion to finance its pensions, on top of $700 million set aside in the first quarter, with a goal of accumulating $7.5 billion in cash to protect itself during the next downturn in the auto market.
  • Chrysler's strong sales have generated record earnings of $938 million on record revenues of $13.2 billion in the first quarter, and the company has $5.9 billion in cash after the first three months of the year, up from $4.5 billion at the end of 1993.
  • Moody's Investor's Service has raised its rating of Chrysler's senior debt and preferred stock, citing the company's "conservative financial policy" and improving product mix.
  • Chrysler's chairman and CEO, Robert J. Eaton, has set a goal of accumulating $7.5 billion in cash to protect the company during the next downturn in the auto market.

Statistics:

  • Crusher will raise its quarterly dividend to 25 cents.
  • Chrysler's 25-cent quarterly dividend represents a 66.7% increase from the current 15-cent dividend.
  • Chrysler plans to contribute $1.8 billion to finance its pensions in 1994, up from the previous plan of $600 million.
  • Chrysler has $5.9 billion in cash after the first three months of the year.
  • Chrysler's record earnings of $938 million in the first quarter represent a 12.6% increase over the same period last year.
  • The company's record revenues of $13.2 billion in the first quarter represent a 13.5% increase over the same period last year.
  • Moody's Investor's Service has raised its rating of Chrysler's senior debt and preferred stock, citing the company's "conservative financial policy" and improving product mix.

Sources:

  • The New York Times, "Chrysler Raises Dividend and Pledges to Fully Finance Pensions," March 1994.
  • Chrysler Corporation, "Chrysler Announces Quarterly Dividend Increase and Pledges to Fully Finance Pensions," March 1994.
  • Moody's Investor's Service, "Rating Action: Chrysler Corporation," March 1994.

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