GM prof­its on the rise

Cape Breton Post - - BUSINESS EXTRA -

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.

AP PHOTO

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.

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