GM Earns $1.3 Billion In 2nd Quarter
General Motors says it made $1.33 billion in the second quarter, a sign of growing strength as the company prepares to sell stock to the public.
It’s GM’s second straight quarterly profit. The company made $865 million in the first quarter.
CEO Ed Whitacre says GM is eager to sell the stock so it can pay off $43.3 billion in government loans that were converted into a large stake in the company. No date has been set for the sale, however an annoucement could come Friday.
GM has been majority-owned by the government since it left bankruptcy protection in July of 2009.
Second-quarter revenue was $33.17 billion, up 5.3 percent from the first quarter on strong sales in China and U.S. sales of revamped cars and trucks.
“I am pleased with our progress on achieving our business objectives,” said Chief Financial Officer Chris Liddell in a statement. “We have delivered strong product, maintained cost discipline, progressed strategic initiatives such as restructuring Europe and acquiring AmeriCredit, and delivered two consecutive quarters of profitability and positive cash flow.”
GM said it earned $2.55 per share for the quarter. GM didn’t report second-quarter results last year because it spent part of the quarter in bankruptcy protection, but on Thursday, GM said it lost $12.9 billion in the second quarter of 2009, or $21.12 per share.
Before this year’s first-quarter results, GM hadn’t reported a profit since the second quarter of 2007.
GM ended its latest quarter with $32.5 billion in cash, down from $36 billion in the first quarter.
GM has been working to streamline operations and slash costs. It has shed four brands, changed leadership and last week announced its U.S. dealership network would number 4,500, about 25 percent smaller than it was in early 2009.
But it still faces hurdles. GM’s U.S. sales rose 14 percent in the first six months of this year compared to the same period in 2009, according to AutoData Corp. That was slightly less than the average industry increase of 17 percent. GM had the highest incentive spending of any major automaker at $3,691 per vehicle, almost $1,000 more than the industry average, according to Edmunds.com.
GM has also relied heavily on sales to rental-car, government and corporate fleets, which are less profitable than sales to individual customers. Retail sales – or sales to individuals – were up 11 percent industry wide through June, but up only 1 percent at GM.
GM is the last of the Detroit automakers to report second-quarter results. Ford Motor Co. made $2.6 billion, its fifth straight quarterly profit. Chrysler Group LLC, which got $15.5 billion in federal aid, narrowed its second-quarter loss to $172 million.
© MMX WWJ Radio, All Rights Reserved. The Associated Press contributed to his report.