GM earnings drop but beats estimates
04-21-2004, 09:35 PM
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GM earnings drop
GM earnings drop - - - by TCC Team and Joe Szczesny (2004-04-20) - Source: The Car Connection
GM's earnings drop in Q1
General Motors Corp.'s earnings dropped 13 percent to $1.3 billion in the first quarter, but still beat Wall Street estimates despite continuing losses in Europe. The giant automaker said strong results at its financing arm and improved business in Asia and tax relief in North America contributed to the first-quarter profits and prompted the automakers to boost its outlook for 2004 to $7 per share.
"As we look at the outlook for the year, we continue to be very optimistic in each of the four regions we have," John Devine, GM's chief financial officer told reporters and analysts. Devine said that GM expects to earn roughly $2 to $2.25 a share in the second quarter, excluding special items. During the first quarter of 2004, GM earned $2.25 a share, compared with $1.5 billion, or $2.71 a share, a year ago. It easily beat the consensus estimate of $1.79 per share. The results from a year ago also had been bolstered by a one-time gain of $505 million from the sales of its defense business to General Dynamics. Excluding the gain from GM Defense, GM earned $1 billion, or $1.84 a share, in the year-ago period. GM's revenue also increased to $47.8 billion in the quarter from $47.1 billion a year earlier.
"Our financial results in the first quarter reflect continued progress," noted Richard Wagoner, GM's chairman and chief executive officer. "But we still have more work to do to improve our profitability as we face a challenging competitive environment, continuing high health care costs and the effects of the artificially weakened Japanese yen."
Devine, meanwhile, acknowledged GM's results in Europe were painful and disappointing as GME lost $116 million, compared to the loss of $65 million. Nonetheless, GM still expects to break even in Europe this year as sales of new models increase, he said. "The lack of profitability in Europe is not acceptable," he said.
The profitability of GM of North America, the company's principle operating unit, also dropped 18 percent to $451 million. Despite the smaller profits in North America and the losses in Europe, GM's automotive operations reported a 12-percent increase in earnings thanks to strong earnings by GM Asia Pacific. GMAP accounted for $275 million or 45 percent of the profit generated by GM's automotive business during the first quarter and most of the profit came from China, Devine said.
GM's North American market share rose to 26.4 percent in the first quarter, from 26.1 percent a year ago. GM attributed the gain in part to the launch of several new models, including the Chevrolet Malibu, Pontiac GTO, and Cadillac CTS-V and stronger fleet sales. In Asia Pacific, GM's market share grew from 4.3 percent last year to 4.7 percent in the first quarter, led by gains in China and India.
GMAC had another record quarter, reporting a profit of $786 million, up from $699 million a year ago, as increased profitability in the financing and insurance operations offset a drop in earnings on the mortgage business side.
GM's earnings drop in Q1
General Motors Corp.'s earnings dropped 13 percent to $1.3 billion in the first quarter, but still beat Wall Street estimates despite continuing losses in Europe. The giant automaker said strong results at its financing arm and improved business in Asia and tax relief in North America contributed to the first-quarter profits and prompted the automakers to boost its outlook for 2004 to $7 per share.
"As we look at the outlook for the year, we continue to be very optimistic in each of the four regions we have," John Devine, GM's chief financial officer told reporters and analysts. Devine said that GM expects to earn roughly $2 to $2.25 a share in the second quarter, excluding special items. During the first quarter of 2004, GM earned $2.25 a share, compared with $1.5 billion, or $2.71 a share, a year ago. It easily beat the consensus estimate of $1.79 per share. The results from a year ago also had been bolstered by a one-time gain of $505 million from the sales of its defense business to General Dynamics. Excluding the gain from GM Defense, GM earned $1 billion, or $1.84 a share, in the year-ago period. GM's revenue also increased to $47.8 billion in the quarter from $47.1 billion a year earlier.
"Our financial results in the first quarter reflect continued progress," noted Richard Wagoner, GM's chairman and chief executive officer. "But we still have more work to do to improve our profitability as we face a challenging competitive environment, continuing high health care costs and the effects of the artificially weakened Japanese yen."
Devine, meanwhile, acknowledged GM's results in Europe were painful and disappointing as GME lost $116 million, compared to the loss of $65 million. Nonetheless, GM still expects to break even in Europe this year as sales of new models increase, he said. "The lack of profitability in Europe is not acceptable," he said.
The profitability of GM of North America, the company's principle operating unit, also dropped 18 percent to $451 million. Despite the smaller profits in North America and the losses in Europe, GM's automotive operations reported a 12-percent increase in earnings thanks to strong earnings by GM Asia Pacific. GMAP accounted for $275 million or 45 percent of the profit generated by GM's automotive business during the first quarter and most of the profit came from China, Devine said.
GM's North American market share rose to 26.4 percent in the first quarter, from 26.1 percent a year ago. GM attributed the gain in part to the launch of several new models, including the Chevrolet Malibu, Pontiac GTO, and Cadillac CTS-V and stronger fleet sales. In Asia Pacific, GM's market share grew from 4.3 percent last year to 4.7 percent in the first quarter, led by gains in China and India.
GMAC had another record quarter, reporting a profit of $786 million, up from $699 million a year ago, as increased profitability in the financing and insurance operations offset a drop in earnings on the mortgage business side.
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