December 31, 1996 marked the end of a very successful year for Chrysler Corporation.
The company's continued to manage its growth effectively. The company's return on equity was an astounding 31.1%. This was significantly improved over the 18.7% in 1995, and considerably higher than the industry average. The company had earnings of $3.529 billion in 1996. This represented an increase of 75.9% from the $2.025 billion in 1995. The earnings were just short of the 1994 total of $3.713 billion. The earnings per share were $4.74 on a fully diluted basis, up from $2.56 the previous year. The company's stock was trading at $33.00 per share with a P/E multiple of 6.57. Dividends were paid out at a rate of $1.40 per share, up from $1.00 in 1995. This was the seventh dividend increase in the last three years. Net sales reached a record high of $61,397 billion. Worldwide 2.9 million vehicles were shipped, generating nearly 2.7 million in unit sales. Chrysler's combined market share in the U.S. and Canada increased to 16.1% from 14.7%.
Chrysler's operations were very profitable in 1996, nearly doubling the profits from 1995. Net earnings as a percent of revenues improved to 5.7%, up from 3.8% in 1995. The increase in operating performance occurred as the company was able to control costs in the face of a some strong growth in sales. Total revenues increased by 15.4%, with strong growth coming from both the sales of manufactured products (16.1%) and finance and insurance services (9.9%). Cost of goods sold decreased to 74.7% from 77.6% in 1995.
Although this marked a strong improvement, the company is not yet performing at the 1994 level (72.8%). Although the operating performance in 1996 was strong, it tends to benefit from the lower operating results from 1995. 1995's performance was sub-par for several reasons: lower minivan shipments, the launch of the all-new minivans, higher sales incentives, higher material costs,...