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GM sales up, but earnings take a dive

Keywords: Tags  General Motors, Daniel Akerson, Daniel Ammann, Corinna Petry

DEARBORN, Mich. — Citing a large decline in first-quarter earnings compared with a year earlier, General Motors Co. management "has internal issues we’re fixing (and) we are not getting ahead of ourselves," chairman and chief executive officer Daniel F. Akerson said during GM’s quarterly earnings conference call.

Detroit-based GM’s revenue totaled $37.76 billion in the three months ended March 31, a 4.3-percent improvement over $36.19 billion a year earlier, so "we’re pleased with the progress in most areas," especially top-line growth, Akerson said, but first-quarter net income fell 68 percent to $1 billion from $3.15 billion. "We’re not immune to industry issues like recession, overcapacity in Europe or competition that’s intensifying everywhere we do business," he said.

GM’s first-quarter global deliveries increased, with North America and the international operations segment’s results more than offsetting declines in Europe and flat results in South America. "Globally, our deliveries were up 60,000 units," Akerson said.

"Europe obviously remains a work in progress," Akerson said. "Our Ebit-adjusted loss was $256 million compared to a breakeven result last year. Net revenue declined about 20 percent, which reflects our lower sales of vehicles and components as well as the impact of a stronger dollar relative to the euro and the British pound.

"These results are disappointing but not unexpected, and we’re working hard to identify new revenue and cost-reduction opportunities to put the business on a path to sustainable profitability," Akerson said.

GM accounted for a 16-percent share of U.S. auto retail sales in the first quarter, down 2.2 percentage points from a year earlier. U.S. dealer inventories totaled 713,000 vehicles (86 days’ supply) at the end of March vs. 574,000 vehicles (75 days’ supply) a year ago.

Daniel Ammann, senior vice president and chief financial officer, said GM will be working down its finished vehicle inventory during the balance of the year, "but our objective is to work a good chunk of that down through the second quarter."

GM’s North American vehicle production totaled 862,000 in the first quarter, up 76,000 vehicles from the same period last year. Capacity utilization at North American operations was 103 percent, but GM’s plants and work force are not under any stress, Ammann said. "We’re quite comfortable running at that level of capacity utilization and even higher," he said.

Ammann said GM expects total U.S. light vehicle sales for the year to be in the 14-million to 14.5-million range, up about 500,000 vehicles from GM’s previous forecast.

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