DETROIT – General Motors Corp. on Tuesday posted a 74 percent drop in second quarter earnings to $477 million, including a charge of $133 million, as lower U.S. vehicle sales and losses from overseas operations took their toll on the world's largest automaker.
Detroit-based GM said earnings dropped to $1.03 per share in the second quarter, including the charge of 23 cents per share, down from $1.8 billion, or a record $2.93 per share, in the second quarter a year ago.
Excluding the charge for a restructuring of affiliate Isuzu Motors Ltd., GM earnings dropped to $610 million or $1.26 per share, near the high end of Wall Street predictions. Analysts had been expecting earnings in the range of 90 cents to $1.59 per share, with a consensus forecast of $1.14, according to tracking firm Thomson Financial/First Call.
GM's shares have outperformed those of its closest rival, Ford Motor Co., by about 25 percent since the beginning of the year. Ford is scheduled to release its second quarter results on Wednesday.
GM said Wall Street predictions for third quarter earnings of 83 cents per share for the third quarter ``appear reasonable.'' The automaker added that its outlook for earnings for the full year remains at $4.25 per share.
GM's revenues fell to $46.1 billion from $48.7 billion in the same quarter a year ago.
Profits from GM's core North American automotive operations, hit by sharp cuts in vehicle production because of the slowing U.S. economy, fell to $521 million from $1.41 billion in the second quarter of 2000.
GM's U.S. sales fell 12 percent in the second quarter from record levels in the second quarter last year. But more importantly, the automaker cut its North American production by nearly 13 percent, which had a direct impact on profits. Earnings closely track production figures because automakers record sales when they ship vehicles from factories to dealerships.
GM said it expects U.S. vehicle sales to moderate in the second half of the year. Sales for the year, including heavy trucks, is expected at 16.8 million units.
Overseas automotive operations reported a loss of $111 million, before the charge for Isuzu.
GM's struggling operations in Europe lost $154 million in the second quarter versus a profit of $166 million in the year-ago quarter.
GM's Asia-Pacific automotive operations made a profit of $12 million before the charge from GM's 49 percent stake in Japan's Isuzu Motors Ltd., which is in the midst of a restructuring. The region lost $123 million in the second quarter last year.
GM's combined Latin America/Middle East and African operations reported a profit of $31 million versus a loss of $10 million.
Helping to offset the drop in automotive earnings, GM's financial services unit GMAC, boosted by falling U.S. interest rates, contributed second-quarter earnings of $449 million, up from $395 million a year earlier.