Published January 13, 2015
General Motors Corp. (GM) on Tuesday said first-quarter earnings soared, before one-time items, on strong gains from North American truck sales, but net profits were slightly lower after a big restructuring charge at its European operations.
The world's largest automaker also raised its U.S. sales outlook and its earnings estimates for the full year. GM shares were up $2.33, or nearly 4 percent, to $63.44 -- its highest level since last August -- in morning trade on the New York Stock Exchange.
GM took an after-tax charge of $407 million in the first quarter for job cuts and asset write-downs in Europe in the first quarter.
Excluding that charge and other unusual items, GM's earnings jumped to $645 million, or $1.29 per share, from $225 million, or 50 cents per share, a year earlier.
Analysts' earnings estimates ranged from $1 to $1.30 per share, with a consensus forecast of $1.14, according to research firm Thomson Financial/First Call.
Including one-time items, GM's net earnings fell to $228 million from $237 million a year earlier. Earnings per share were 57 cents, up from 53 cents a year earlier because of a decline in shares outstanding.
"Strong vehicle sales in North America coupled with cost reductions drove our profit improvements (before special charge)," GM Chief Executive Rick Wagoner said in a statement. "We know we must make significant progress in Europe, and we're working hard to make it happen," he added.
NORTH AMERICAN PROFITS SURGE
Profits from GM's core North American auto operations surged to $625 million in the first quarter from $120 million a year earlier. The rise was driven by GM's strong truck lineup, which has gained market share from competitors Ford Motor Co. and the Chrysler unit of DaimlerChrysler AG .
GM, citing its strength in the U.S. market, raised its earnings and sales forecasts for the full year. It said it now expects to earn about $4.60 per share, including losses of about 40 cents per share from its Hughes Electronics Corp. unit. In March it forecast earnings of $3.10 per share.
GM said it expects second-quarter earnings of $1.90 per share, including a loss of about 10 cents for Hughes.
Wall Street analysts' forecasts for the full year range from $2.97 to $5 per share, with a consensus estimate of $4.17, according to Thomson Financial/First Call. GM earned $3.23 per share in the previous year.
For the second quarter, analysts' estimates range from $1 to $2.30 per share, with a consensus of $1.59, according to First Call. In the year-ago second quarter GM earned $1.26 a share.
The automaker also said it expects U.S. vehicle sales across the industry to total 16.5 million cars and trucks this year, up from its previous forecast of more than 16 million.
GM's European automotive operations lost $125 million in the first quarter, excluding the restructuring charge, compared with a year-earlier loss of $86 million.
GM's Adam Opel brand, based in Germany, has been losing market share to competitors and has been hit by slow sales its home market. Under its "Project Olympia" restructuring, which includes cutting thousands of jobs and reducing production capacity, Opel aims to return to profitability next year.
Many of GM's North American vehicle assembly plants ran overtime during the first quarter, with production surging by 11 percent from a year earlier. A blowout 2001 fourth quarter, when sales hit record levels spurred by zero-percent financing offers to consumers, left vehicle inventories at low levels.
Stronger sales of GM's highly-profitable sport utility vehicles especially helped the bottom line in the first quarter.
Ford, scheduled to report its first-quarter results on Wednesday, is expected to post its fourth consecutive quarterly loss, its worst performance in more than a decade.
Chrysler, in the midst of a massive restructuring that includes cutting 26,000 jobs, is expected to report its first quarterly operating profit since the second quarter of 2000. Its results are due April 30.
Shares of GM have outperformed the shares of Ford, its closest rival, by about 50 percent since the Sept. 11 attacks on the United States.