General Motors on Wednesday reported a loss of $US318 million, or $0.56 per share, for the second quarter of 2005, compared with net income of $1.4 billion, or $2.42 a share, in the second quarter of 2004, excluding special items.
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Revenue was $48.5 billion, compared with $49.3 billion a year ago.
The results were dragged down primarily by poor performance in North America.
Including special items, the loss was $286 million, or $0.51 per share. The ‘special items’ included a $126 million restructuring charge at GM Europe, and recognition of the recurring tax benefits above those reflected in the 15% rate used in GM’s adjusted earnings. These items had a net favourable effect of $32 million, or $0.05 per share.
“Our second-quarter results reflect a mix of some important pluses and minuses,” GM chairman and chief executive officer Rick Wagoner said.
“On the positive side, sales were up in all regions and global market share increased. In addition, financial results were positive in four of our operating units, with GMAC and GM Latin America / Africa /Mid-East continuing their recent favourable performance and GM Europe and GM Asia Pacific showing significant improvement from the first quarter.
“But, importantly, on the minus side, GM North America’s financial performance continued to be very disappointing.
“While the results reflect a significant reduction in US dealer inventory, with second-quarter inventories down 349,000 units from mid-year 2004 and 224,000 units from the first quarter of 2005, they also re-emphasise the need for us to significantly improve our cost structure in all major areas – material costs, productivity, capacity utilisation and especially health care.”
Automotive Operations
Global automotive operations reported a loss of $948 million in the second quarter of 2005, as profitable results in Europe, Asia and the Latin American/Mid-East region were more than offset by losses in North America . Automotive operations earned $579 million a year ago.
GM North America reported a loss of $1.2 billion compared with earnings of $355 million in Q2 2004.
Second-quarter results were adversely affected by lower production volumes – down 142,000 units, a less favourable product mix and increased health-care costs. Sales were up as a result of improved acceptance of new products and highly successful marketing programs. The combination of lower production and stronger sales helped to significantly reduce US dealer inventories during the quarter to just over 1 million vehicles.
GM Europe reported earnings of $37 million compared with a loss of $45 million in 2004. These results reflect continued improvement in cost reduction and the effects of the company’s restructuring efforts. GM’s market share in Europe was 9.7 percent in the second quarter of 2005, unchanged from a year ago.
GM Asia Pacific earned $176 million, well below the $259 million earned a year ago.
GM Latin America/Africa /Mid-East earned $33 million compared with $10 million a year ago. agoner said.
GMAC
General Motors Acceptance Corp. reported net income of $816 compared with $846 million in Q2 2004, as lower earnings from financing operations were partially offset by increased earnings from mortgage and insurance operations.
