General Motors earnings were off a massive 243% year on year in the first quarter of 2005 with automotive operations earnings plunging 331%. Financial arm GMAC failed to gallop to the rescue as its earnings were down 4.7%.
Go deeper with GlobalData
Asia-Pacific operations income was down 78% but, on a brighter note, General Motors Europe losses were reduced 11%, and Latin America/Africa/Middle East income soared 4,500%.
GM reported a loss of $US839 million, or $1.48 per share for the first three months of 2005, excluding special items and a tax-rate adjustment.
These results were in line with the lowered guidance GM issued on March 16 and compare very unfavourably to net income of $1.2 billion, or $2.12 per share, in the first quarter of 2004. Revenue fell 4.3% to $45.8 billion.
Consolidated net income for the first quarter of 2005, including special items, was a loss of $1.1 billion, or $1.95 per share.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe special items include charges for restructuring in Europe, US salaried attrition programmes, and “facility impairments”, partially offset by tax benefits. These items had a net unfavourable effect of $265 million, or $0.47 per share in the first quarter of 2005 – there were no special items in the first quarter of 2004.
“While most of our business units exceeded expectations, the results at GM North America (GMNA) were clearly disappointing,” said GM chairman and chief executive officer Rick Wagoner.
“We have well thought-out plans to address GMNA’s poor performance, starting with aggressive product introductions this year, value-focused marketing initiatives, and further reductions in our cost structure, where the greatest need is to address the challenging health-care cost situation.”
Automotive operations
GM’s automotive operations reported a loss of $1.3 billion in the first quarter of 2005, compared with earnings of $561 million in the year-ago quarter.
GM North America accounted for this weak performance, reporting a loss of $1.3 billion in the first quarter of 2005, compared with earnings of $401 million a year ago.
GM’s market share in North America was 25.2% in first-quarter of 2005, down from 26.3% in the year-ago period.
“While we were encouraged by improved sales in March, we significantly reduced production volumes during the first quarter to balance inventories,” Wagoner said. “These adjustments reduced dealer inventory levels by nearly 100,000 units from the year-ago period, but they also adversely affected our North American financial results.”
GM Europe (GME) posted a loss of $103 million in the first quarter of 2005, an improvement from the $116 million loss in the year-ago quarter.
GM Asia Pacific (GMAP) reported net income of $60 million in the first quarter of 2005, compared with $275 million in the same period last year, reflecting primarily lower equity earnings in China and Japan. The region’s market share rose to 5% in the first quarter of 2005 from 4.9% in the year-ago quarter.
“GM’s Asia Pacific operations delivered profitable results in a challenging environment,” Wagoner said. “While net income was down from the year-ago period, we expect stronger profitability in the Asia Pacific region as the year progresses. In China, even though industry sales were down, GM continued to gain market share. We expect to continue to strengthen our product portfolio in China throughout the year as we roll out 10 new or upgraded models.”
GM Latin America/Africa/Mid-East (GMLAAM) earned $46 million in the first quarter of 2005, an improvement from year-ago earnings of $1 million. GMLAAM recorded record first-quarter sales volume during the quarter but market share declined slightly to 16% in the first quarter of 2005 from 16.2% a year ago.
“GMLAAM reported its fifth consecutive quarter of profitability, with several countries reporting record sales volumes and market share,” Wagoner said. “We’re particularly pleased with our performance in Argentina, Venezuela and South Africa, where we reported double-digit sales gains.”
GMAC
General Motors Acceptance Corp. (GMAC) earned $728 million in the first quarter of 2005 compared with $764 million in the year-ago period.
GMAC’s financing operations reported net income of $248 million in the first quarter of 2005, compared with $442 million a year ago. The decrease reflects significantly lower net interest margins, partially offset by improved credit experience and stronger used car prices.
Mortgage operations earned $385 million in the first quarter of 2005, up from $231 million in the comparable period last year.
GMAC’s insurance operations reported net income of $95 million in the first quarter of 2005, up from the $91 million in the first quarter of 2004. Strong net underwriting revenue and investment income contributed to the results.
Automotive operating cash flow for the period ended March 31, 2005, totalled a negative $3.0 billion, before European restructuring charges and the Fiat settlement.
Outlook
GM expects total US industry sales in the second quarter of 2005 to come in at a seasonally adjusted annual selling rate of around 17 million, about flat with the selling rate in the first quarter of 2005.
“Given the uncertainty affecting key elements of our financial forecast, such as resolution of the health-care cost crisis, GM has determined that it will not provide earnings guidance for the 2005-calendar year at this time,” the statement said.
