Profit at General Motors dipped in the first quarter despite strong results… (Associated Press )
General Motors Co. posted lower profits in the first quarter, but still did better than Wall Street expected based on the strength of U.S. auto sales.
The automaker said it earned $1 billion, or 60 cents a share, in the first quarter. That was a 69% drop from the $3.2 billion, or $1.77, GM earned in the same period a year earlier. Revenue grew a little more than 4% to $37.8 billion.
Excluding one-time charges, GM earned 93 cents a share in the quarter ended March 31, which beat the average 85 cents a share predicted by Wall Street analysts.
“The U.S. economic recovery, record demand for GM vehicles in China and the global growth of the Chevrolet brand helped deliver solid earnings for General Motors,” said Dan Akerson, GM’s chief executive.
In North America, GM posted an operating profit of $1.7 billion, a 35% gain from the same period a year ago. It also made money in China, but operating profit dipped to about $529 million from $586 million.
Like Ford Motor Co. and other automakers, GM’s problem area is Europe, which suffers from a debt crisis and recession in some nations. GM lost $256 million in the region. It broke even there a year ago.
Although the European loss was more than $100 million less than what Barclays Capital analyst Brian Johnson expected, restructuring its operations in the region to become profitable remains a difficult task for GM.
“The complexity of the situation and involvement of the unions and politicians will make this a drawn-out process over the next few months,” Johnson said.
In the U.S. GM is selling fewer cars but is getting on average about $1,700 more per sale, according to auto price information company TrueCar.com.
The automaker’s share of the U.S. market slipped to 17.5% in the first quarter of 2012 compared with 19.4% in the same quarter a year earlier, according to Autodata Corp.
“Despite hitting its lowest U.S. market share in decades earlier this year, GM's first-quarter earnings are buoyed by a relatively solid performance in North America and continued strong results from China, which help to offset European losses,” said Michelle Krebs, an analyst with auto information company Edmunds.com.
The company faces challenges grabbing back those sales. Toyota Motor Co. in April gained ground on GM and other automakers, its sales climbing as it recovered from the assembly-line disruptions caused by last year’s Japanese earthquake.
Additionally, GM is facing tougher competition from “brands like Volkswagen and Hyundai who are pursuing — and meeting — aggressive sales targets,” Krebs said.
GM, which is recovering from its 2009 bankruptcy reorganization and government bailout, was the last of the domestic automakers to report financial results for the quarter.
Last week Chrysler Group posted net income of $473 million for the first quarter of 2012, up more than 300% from $116 million a year earlier. The company said the gains were driven primarily by a 40% rise in U.S. retail sales. It was the company's highest quarterly profit since it emerged from bankruptcy in 2009.
Ford earned $1.4 billion in the quarter, down 45% from a year earlier.
The federal government still owns about 32% of GM. The automaker’s shares fell 52 cents, or 2%, to $22.41 in morning trading Thursday.
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