General Motors Corp. on Wednesday reported earnings from continuing operations of $1.3 billion, or $2.36 per share, in the second quarter of 2004. This compares with earnings of $879 million, or $1.57 per share, in the second quarter of 2003. Revenue rose 7.1% to $49.1 billion.
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As was the case with Detroit Big Three rival Ford, which posted Q2 results on Tuesday, financial services drove GM as its finance arm, General Motors Acceptance Corp. (GMAC) posting record quarterly earnings of $860 million, up from $834 million a year ago.
Automotive earnings rose to $529 million, up from $140 million in Q2, 2003, and reflecting improved earnings in North America, Asia Pacific, and the Latin America/Africa/Mid-East region, though gains there were partially offset by increased losses at long-troubled GM Europe.
“Overall, our financial results for the quarter were reasonably good,” said GM chairman and CEO Rick Wagoner. “GMAC once again had an outstanding quarter, setting another record, and our automotive operations reported improved earnings as well. But competition in the global automotive market remains very intense, and we still have much work to do to improve our automotive profitability to targeted levels.”
Earnings from GMAC’s financing operations rose 14% to $452 million in the second quarter, up from $396 million a year ago, as lower credit losses and improved lease-residual values more than offset narrower net-interest margins.
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By GlobalDataSecond-quarter earnings at the insurance group were $75 million, a significant improvement from earnings of $23 million a year ago.
Earnings from the mortgage unit totalled $333 million, compared with record year-ago earnings of $415 million.
GM’s global automotive earnings totalled $529 million in the second quarter of 2004, In the second quarter, though GM’s market share was up in three out of four regions of the world; global share totalled 14.7%, down from 14.9% in the year-ago period. For the six months ended June 30, 2004, GM’s market share was also up in three out of four regions, and totalled 14.1%, compared with 14.2% in the year-ago period.
GM North America (GMNA) earned $328 million in the second quarter of 2004, compared with earnings of $83 million in the second quarter of 2003. Improvements in material costs and pricing more than offset less-favorable mix and higher recall costs. GM’s market share in North America was 26.2% in the second quarter of 2004, compared with 27.2% in the year-earlier period. For the six months ended June 30, 2004, GM’s market share in North America was 26.3%, versus 26.7% in the year-ago period.
GM Europe (GME) reported a loss of $45 million in the second quarter of 2004 compared with a loss of $3 million in the year-ago quarter. The most recent quarter’s results reflect intense price competition, foreign-exchange losses and continuing restructuring costs for GM’s share of the GM-Fiat powertrain joint venture, partially offset by continuing cost improvements. GM’s market share in Europe rose to 9.8% in the second quarter of 2004 from 9.4% in the year-ago period. For the six months ended June 30, 2004, GM’s market share in Europe was 9.6%, up from 9.5% in the year ago period.
“Our European operations are making significant progress in reducing costs and improving quality,” Wagoner said. “However, despite growing market share, we’re not getting the revenue growth that we had hoped for, particularly in the traditionally large western European markets. So, that means we have to pick up the pace in new-model introductions, while we simultaneously reduce costs. That’s a tough assignment, and it’s going to require GME to do a better job of leveraging our global resources to bring new products to market faster and at lower cost.”
GM Asia Pacific (GMAP) earned $236 million in the second quarter of 2004, up from $163 million in the year-ago quarter. Continued strong performance by Shanghai GM in China, improved earnings in India and Thailand, and smaller losses at GM-Daewoo Auto & Technology Co. (GMDAT) contributed to GMAP’s overall performance. GM’s market share in the Asia Pacific region rose to 5.4% in the second quarter from 4.8% a year ago, led by gains in China and India. Through the first six months of 2004, GM’s market share in the Asia Pacific region was 5.0%, up from 4.6% in the comparable period a year ago.
GM Latin America/Africa/Mid-East (GMLAAM) earned $10 million in the second quarter of 2004, a significant improvement from the year-ago loss of $103 million. This year’s results reflect higher production volumes and improved earnings in Venezuela and South Africa. GM’s market share in the GMLAAM region rose to 17.4% in the second quarter of 2004 from 15.6% a year ago. For the six months ended June 30, 2004, GM’s market share in the LAAM region was 17%, up from 15.6% in the year-ago period.
GM expects total U.S. industry sales of approximately 17.2 million vehicles in calendar year 2004, reflecting strengthening labour markets and increases in household income. Through the first six months of 2004, industry sales came in at an annualised rate of around 16.9 million units.
For the third quarter of 2004, GM expects to earn approximately $0.75 to $1.00 per share, excluding special items. GM’s 2004-calendar-year earnings estimate remains unchanged at approximately $7.00 per share, excluding special items.
Financial services earnings help Ford triple Q2 net income
