GM profits on the rise
Big profits from trucks and SUVs helped General Motors overcome a sales slowdown in China, economic problems in Venezuela and payments to ignition switch crash victims as the automaker’s second-quarter net income rose sixfold to nearly $1.12 billion.
The Detroit company made 67 cents per share from April through June compared with 11 cents a year ago. The yearearlier quarter included $1.5 billion in expenses for a string of safety recalls. GM’s $2.8 billion pretax profit in North America was a second-quarter record.
The strong profits helped GM distance itself from the recalls. Still, the company raised its estimate for what it will spend to compensate victims of crashes caused by defective ignition switches from $600 million to $625 million. Chief Financial Officer Chuck Stevens called it a final estimate, although GM still faces multiple lawsuits and a potentially large penalty from a Justice Department criminal investigation.
GM also said Thursday that it expects pretax profits to be better in the second half than the first, when it made $5 billion. Shares jumped more than 7 per cent as the market opened.
Excluding $1.1 billion in special items, GM made $1.29 per share, handily beating the $1.08 average of seven analysts surveyed by Zacks Investment Research. Among the special items were $720 million for currency devaluation and asset write-downs in Venezuela and $75 million to compensate ignition switch crash victims.
Cathy Clegg, Vice President, GM North America Manufacturing and Labor Relations, addresses employees. GM plans to spend $1.4 billion to expand and improve the SUV producing plant to meet strong demand for its vehicles.