GM profit slumps 88%; 2Q likely worse

DETROIT » General Motors’ first-quarter net income fell 88%, but it still managed to make $247 million despite the arrival of the global coronavirus pandemic.

U.S. automakers suspended production in much of the world in late March. For GM, that clipped revenue for the quarter by 6%, to $32.7 billion, but that’s not as bad as industry analysts had been expecting.

Shares jumped 6%

Wednesday.

The company essentially has been without revenue since early March, meaning that the second quarter almost certainly will be worse.

However, GM plans to reopen most of its U.S. and Canadian factories starting May 18, and Chief Financial Officer Dhivya Suryadevara said there are signs that demand for cars and trucks exists despite the pandemic.

On a conference call with reporters Wednesday, Suryadevara said demand has been stronger in some pockets of the U.S. where truck sales are high and cases of the coronavirus are relatively low. North America is by far GM’s most profitable market.

“There are bright spots within the industry,” Suryadevara said. “Obviously trucks are our strong suit, and that’s something we’re going to capitalize on.”

GM reported that recent sales declines have been far smaller in southern, southwest and western U.S. states than in areas such as New York and Michigan, which have been hit harder by the virus.

But Edward Jones analyst Jeff Windau said the southern and western states have been hit hard by slowdowns in the oil and construction businesses that have brought job furloughs. Both businesses typically are big pickup truck customers.

“We’re a little more cautious, I think, on the near term,” Windau said. “That’s part of the challenge. What does the recovery look like and how long does it take?”