National Post (National Edition)
GM results not as bad as feared
General Motors Co. posted a stronger-than-expected quarterly profit as its loss in Europe was not as bad as feared, and its results were boosted by delayed spending in North America.
Analysts said GM’s North American outperformance added US14¢ to the secondquarter results, helping the company top Wall Street’s expectations by US16¢. GM shares fell US52¢ to US$19.14 in New York trading Thursday.
However, GM, which delayed the spending to the third quarter, said its average profit outlook for the second and third quarters combined in North America would still be the same as previously forecast, suggesting analysts will need to cut their estimates for the third quarter.
GM had previously said its second and third quarter operating profit in North America would be similar to the US$1.7-billion it reported in the first quarter. It earned US$1.97-billion in the second quarter, implying it will earn about US$1.4-billion in the third quarter, analysts said.
Net income attributable to common shareholders in the second quarter fell 41% to US$1.49-billion, or US90¢ a share, compared with US$2.52billion (US$1.54) in the yearearlier quarter. Analysts had expected US74¢ a share. Revenue fell to US$37.6-billion from US$39.4-billion a year before as the stronger U.S. dollar hurt results. Analysts had expected US$38.58-billion.
Jefferies analyst Peter Nesvold said the shifting of earnings was overshadowed by the better-than-anticipated performance in Europe, where GM lost US$361-million. Analysts had expected a loss of US$426-million.
“Is Europe a function of execution or is it the calm before the storm?” said Mr. Nesvold, who has a hold rating on GM shares. “I feel like Europe will continue to be a black hole until we’re at least able to frame the magnitude of the downturn. They showed some nimbleness in this quarter that they have not shown so far since the new GM went public. People will remain skeptical, though, before they want to give them any credit.”
GM officials acknowledged Europe remains challenging and they declined to say when it can return to profitability in that region, where it has racked up 12 years of losses.
“We clearly have more work to do to offset the headwinds we face, especially in regions like Europe and South America,” GM chief executive Dan Akerson said.