GM Posts $1B Profit In First Quarter
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DETROIT (WWJ) – General Motors earned a billion dollars in the first quarter, beating analysts expectations.
The earnings are substantially less than the company’s $3.2 billion dollar first quarter last year. The 2011 profits were inflated by some one time gains, while this year’s report was hurt by one time costs. GM says it’s “Earnings Before Interest and Taxes” in the first quarter were $2.2 billion.
INTERVIEW: Dan Ammann, GM CFO
“The U.S. economic recovery, record demand for GM vehicles in China and the global growth of the Chevrolet brand helped deliver solid earnings for General Motors,” said GM CEO Dan Akerson.
“New products are starting to make a difference in South America, but Europe remains a work in progress. We’ll continue to work on both revenue and cost opportunities until we have brought GM to competitive levels of productivity,” he continued.
General Motors improved its earnings in North America, making $1.7 billion in its home market. It lost $256 million in Europe.
“We’re taking a lot of action on the cost side of the business, more to come on that front,” said GM Chief Financial Officer Dan Ammann, of the losses in Europe.
Ammann said General Motors hasn’t seen the end of its challenges in Europe, and said there was a small risk that problems could cross the Atlantic and impact the recovery in the United States.
“There’s clearly a risk around that. The world’s more interconnected than it used to be. But the U.S. economy is showing some signs of life.”
GM confirmed reports that they are making some small cuts to the research and development staff. But, Ammann said they are adding staff elsewhere.
“It’s a function of deploying the resources in the most effective way possible.”
The only guidance GM would give for the future is that it’s profits here in North America would continue to be around the same as last year. That’s in line with what analysts are expecting.
“Despite the market share decline in the US, gains in China and improvements in transaction prices are likely to contribute to another profitable quarter but there’s still room for improvement, especially in further enhancing their product line up,” said Jesse Toprak, VP market intellegence of TrueCar.com.
While GM and others have increased their U.S. sales forecast for the rest of the year. They are facing new competition.
“In comparison to last year, though, GM will see bigger challenges in the U.S. by Japanese brands continuing their comebacks from last year’s earthquake, as well as brands like Volkswagen and Hyundai who are pursuing – and meeting – aggressive sales targets,” said Edmunds.com analyst Michelle Krebs.
That’s not a surprise to GM.
“We knew they’d be back,” said Ammann. “We’re prepared for it. We’ve got the products to take them on, head on.”
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