GM posts quarterly loss on strike, charges
General Motors Corp posted a Q1 loss due to a costly supplier strike, waning demand for its most profitable vehicles and charges related to struggling former subsidiaries, although results beat Wall Street expectations.
Weighed down by those charges, GM posted a net loss of $3.25 billion, or $5.74 per share, compared with a profit of $62 million, or 11 cents a share a year-earlier.
Revenue declined to $42.7 billion from $43.4 billion.
Excluding one-time items, GM reported a first-quarter loss of $350 million, or a 62 cents per share, a narrower loss than Wall Street had expected.
On average, analysts had expected GM to post a loss of $1.67 per share before items, according to Reuters Estimates.
GM Chief Financial Officer Ray Young said analysts may have underestimated the strength of GM's sales from emerging markets and the progress it made in cutting costs in North America.
“The headline numbers don't look that great, but when you actually peel back the numbers ... I feel the first quarter is very encouraging,” Young told reporters.
Shares of GM rose as much as 6% in pre-market trade. The stock had dropped nearly 15% since the start of the year amid mounting evidence of deepening difficulties for the No. 1 US automaker.
GM's global sales fell nearly 1% to 2.25 million vehicles in the first quarter, falling far behind rival Toyota Motor Corp, which reported a nearly 3% increase to 2.41 million vehicles.
GM and Toyota were roughly even in 2007 for the top spot among the world's automakers, with GM slightly ahead if sales from a China joint-venture were included.
While GM saw robust demand in the emerging markets and growth in Europe in the past quarter, it was overshadowed by a more than 10% decline in North American vehicle sales.
A slowing US economy and rising gas prices sent industry-wide sales down 8% in the quarter and have driven sales of larger vehicles down more sharply.
GM has also been pressured by a two-month United Auto Workers strike against Detroit-based American Axle & Manufacturing Holdings Inc, a major supplier to GM.
GM said the strike had cost 100,000 units of lost production and depressed first-quarter results by about $800 million.
GM has shut down or partly idled about 30 plants in North America because of that strike, which has mainly affected production of slower-selling large SUVs and pickup trucks. (Reuters)
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