Reporting Jeff Gilbert
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DETROIT (WWJ) - Problems in Europe took a big bite out of General Motors’ second quarter earnings, but not quite as much as analysts expected.
GM posted a $1.5 billion profit, or 90 cents a share. That compares to $2.5 billion for the same quarter last year.
INTERVIEW: WWJ AutoBeat Reporter Jeff Gilbert talks with GM CFO Dan Ammann
“Our results in North America, our International Operations and GM Financial were solid, but we clearly have more work to do to offset the headwinds we face, especially in regions like Europe and South America,” said GM Chairman and CEO Dan Akerson. “Despite this challenging environment, GM has now achieved 10 consecutive quarters of profitability, which is a milestone the company has not achieved in more than a decade.”
In a contrast to three years ago, when GM was emerging from bankruptcy, North American operations lead the way, with profits of nearly $2 billion dollars.
“Really solid business, good product portfolio, doing the right things in the marketplace in terms of matching supply with demand,” said GM Chief Financial Officer Dan Ammann.
GM, however, warned that North American results were stronger in the second quarter because some spending was put off until the third quarter.
International Operations—mostly China—added another $557 million to GM’s bottom line.
The company’s struggling European operations lost $361 million dollars. Add that to the first quarter losses, and the European red ink for GM stands at $617 million, with more losses expected in the second half of the year. Amman says they are working to turn Europe around, but it won’t be easy.
“You’ve seen over the last few months, we’re continuing to invest in the product portfolio,” he said. “We’re continuing to take actions on cost and capacity. We’re continuing to take actions in terms of getting the right leadership in place to drive the business to be successful. But, all of that’s against a very challenging macroeconomic backdrop.”
Amman couldn’t say how long it would take General Motors European turnaround plans to take hold. Shortly after emerging from bankruptcy in 2009, GM scrapped plans to sell its Opel brand. Amman says the company remains committed to its European operations.
“We have to be there,” he said. “We have to be a major player in Europe. We’re doing everything against this very challenging backdrop to get the business to where we want it to be.”
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