GM 2Q net earn­ings fall on loss from sale of Euro­pean unit

But profits in in­ter­na­tional op­er­a­tions, in­clud­ing China, nearly dou­bled

The Hamilton Spectator - - BUSINESS - TOM KRISHER DETROIT —

Gen­eral Mo­tors’ sec­ond-quar­ter net profit fell more than 40 per cent as the com­pany lost money on the sale of its Euro­pean unit and took charges for re­struc­tur­ing in In­dia and sell­ing its busi­ness in South Africa.

The com­pany posted net in­come of $1.66 bil­lion, com­pared with a record $2.87 bil­lion a year ago. But when the Euro­pean loss and one­time items are stripped out, GM still made $2.4 bil­lion from con­tin­u­ing op­er­a­tions, or $1.89 per share. That’s down 12 per cent from last year but still eas­ily beat Wall Street es­ti­mates. An­a­lysts polled by Fac­tSet ex­pected only $1.68 per share.

Rev­enue was $37 bil­lion ex­clud­ing Europe, fall­ing short of an­a­lyst es­ti­mates of $40.3 bil­lion.

Chief Fi­nan­cial Of­fi­cer Chuck Stevens called it a strong quar­ter with pre-tax earn­ings of $3.7 bil­lion. That’s down $100 mil­lion from a year ago, due largely to a $270 mil­lion drop in North Amer­ica that Stevens at­trib­uted to pro­duc­tion cuts as the com­pany ramps up to launch new Sil­ver­ado and Sierra full-size pickup trucks.

GM’s bot­tom line in­cludes a $770 mil­lion loss as GM pre­pares for the sale of its Euro­pean Opel and Vaux­hall brands to France’s PSA Group, owner of Peu­geot and Citroen. It also in­cludes $654 mil­lion in one-time items from re­struc­tur­ing in In­dia, the sale of GM’s South Africa busi­ness and lin­ger­ing le­gal costs from an em­bar­rass­ing ig­ni­tion switch re­call. Stevens said the sale to PSA is on track to close by the end of the year.

Pre-tax profits in North Amer­ica, GM’s most lu­cra­tive re­gion, fell 14 per cent for the quar­ter to $3.48 bil­lion.

But profits in in­ter­na­tional op­er­a­tions, in­clud­ing China, nearly dou­bled to $340 mil­lion. GM also nar­rowed its loss in South Amer­ica from $118 mil­lion to $23 mil­lion. Profits at its loan-mak­ing unit rose 67 per cent to $357 mil­lion.

GM made a strong profit in the U.S. even though sales were down 4 per cent for the quar­ter. That’s be­cause much of the sales drop came from lower-profit cars, which were down 19 per cent. Truck and SUV sales rose 3 per cent, and that pushed up GM’s av­er­age sales price per ve­hi­cle up 3 per cent to $39,118, ac­cord­ing to Ed­munds.com.

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