GM posts $891-million profit

July 31, 2007

BY KATIE MERX

FREE PRESS BUSINESS WRITER

General Motors Corp., the largest U.S. automaker, reported an $891-million profit for the second quarter of the year, driven by strong sales in emerging global markets and reduced costs from its restructuring efforts.

"We again saw improved results in sales, income and cash flow this quarter, driven by the continued successful implementation of our business strategies," said Rick Wagoner, GM chairman and chief executive officer.

"In particular, our heavy commitment to key growth markets around the world really paid off in strong growth and earnings. In North America we continue to make progress with our focus on great new products, a disciplined sales and marketing strategy, and structural cost reduction, although profitability remains close to breakeven."

GM’s quarterly profit of $891 million, or $1.56 per diluted share, is an improvement of $4.3 billion compared with a reported net loss of $3.4 billion, or $5.98 per diluted share, in the year-ago quarter.

The positive results boosted GM’s stock 7% in pre-market trading this morning, with shares of the automaker trading up $2.29 a share to $34.90 about 7:50 a.m.

The earnings results for the second quarter 2007 included $520 million, or 92 cents per diluted share, in special charges associated with GM's support of the bankruptcy and reorganization of its former parts arm Delphi Corp. and various North America restructuring charges.

Excluding those charges, GM said it earned $1.4 billion, or $2.48 per diluted share, compared with $1.1 billion, or $2.03 per diluted share, in the year-ago quarter.

GM’s North American operations reported a net loss of $39 million, compared with a net loss of $3.95 billion in the same quarter last year. When it excludes Allison Transmission, which it is in the process of selling, the North American operations reported a slight profit of $78 million for the quarter, compared with an adjusted loss of $94 million from continuing operations in the year-ago quarter.

Overall, Credit Suisse analyst Chris Cerasco said in a note Tuesday morning that GM’s earnings — at $2.48 per share — had “a big upside,” coming in significantly higher than the consensus analyst estimate of $1.13 per share. But, he said, North America again fell “short of expectations,” with 80 cents of its earnings improvement coming from tax-related gains.

GM said that its North American results reflect reduced fixed costs and that a high percentage of its vehicle sales last quarter were of profitable large trucks and well-equipped vehicles. Those positives, however, were offset by lower volumes of sales and unfavorable foreign exchange rates, the company said.

“It’s true that our North America team has made huge improvements, and we appreciate everyone’s hard work,” Wagoner said. “But our current earnings clearly demonstrate we’ve got more to do.”

Contact Katie Merx at 313-222-8762 or kmerx@freepress.com

Copyright © 2007 Detroit Free Press Inc.

 

glad to hear that

 

They are still operating at a loss, just not as big. Guess that all depends on how you want to look at it. They are still in trouble.

 

If only I had taken the money I saved when I bought my HHR and invested it in their stock. Then I'd be really happy. No, really, I'm am very glad at least one of the domestic car companies has made a profit. I'd hate to think that foreign cars would become our only option!