GM Posts Narrow 1Q Profit Despite Recalls
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DETROIT (WWJ) - GM posted a narrow first quarter profit, despite $1.3 billion in recall costs.
The company earned $125 million in a quarter when many expected a loss.
“It was an understatement to say that the first quarter was challenging for General Motors,” said GM CEO Mary Barra.
This was GM’s worst quarter since late 2009, when they posted a $4.4 billion dollar loss, immediately after leaving bankruptcy.
Recalls took $1.3 billion from GM’s bottom line in the first quarter. $700 million of that was related to the ignition switch recall. The rest came from two unrelated recalls. General Motors recalled nearly 7 million vehicles in the first quarter.
Barra said the pace of recall repairs was picking up, and promised results from the company’s internal investigation into the issues leading to the recall.
“It doesn’t matter if the roots of the issue are more than a decade old,” she said. “This leadership team is responsible for making things right, and we will.”
Without the recall costs and other costs related to currency issues in Venezuala, GM would have earned $1.8 billion in the quarter.
Chief Financial Officer Chuck Stevens couldn’t say what additional recall costs we may see in future quarters.
“That’s very difficult to predict,” he said. “What we’ve taken, the charges in Q1, is what we know today. We’re actively monitoring the safety of our vehicles in the market. When there’s an issue, we’ll address it.”
GM earned $557 million in North America despite the recall costs. GM lost $284 million in Europe, but that also reflected the costs of a large plant closing.
So far, GM sales have remained strong. Barra says they see no sign of them weakening.
“Although it is early, it appears we have not experienced a meaningful impact on sales. We continue to be optimistic about 2014.”
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