GM reports profit of $891M, beats expectations
DETROIT -- The automaker reported net income of $891 million for the second quarter, compared with a loss of $3.4 billion a year ago. Earnings adjusted to exclude one-time gains were up $1.4 billion to $1.1 billion.
It was the third straight quarterly profit for the automaker, which launched a major restructuring in 2005, when it lost $3.2 billion for the year.
Still, the automaker was in the red in North America, its most important market. GM posted a net loss of $39 million, a huge improvement over last year's net loss of $3.95 billion.
"In North America, we continue to make progress with our focus on great new products, a disciplined sales and marketing strategy, and structural cost reduction," said CEO Rick Wagoner.
The automaker has been weaning customers off steep incentives and sticking to what it calls a value pricing program. But weakness in the U.S. market means the automaker may be forced to resort back to incentives. The company this week announced it is offering zero percent financing again on its full-size line of Chevrolet and GMC brand pickups.
Adjusted for one-time items, North America posted a profit of $78 million, compared with adjusted earnings of $94 million last year. "It's true that our North America team has made huge improvements, and we appreciate everyone's hard work. But our current earnings clearly demonstrate we've got more to do," Wagoner said.
Himanshu Patel, an analyst with J.P. Morgan, said GM's earnings were due mostly to strong performance in international markets. Europe, which earned $236 million, Latin America, which earned $213 million, and Asia Pacific, at $237 million, were all higher than analysts expected.
David Kudla, CEO of Mainstay Capital Management, says the automaker still faces long-term challenges in dealing with health care and other legacy costs, but Tuesday's earnings were a good sign.
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