General Motors Co. first-quarter results fell 82% but far
exceeded Wall Street expectations, as the push to sell cars and
trucks at higher prices in North America helped the auto maker
offset the cost of model recalls.
The company reported a first-quarter profit of $213 million,
before the payout of preferred dividends, compared with $1.18
billion a year earlier. It was the worst quarterly performance
since the company exited bankruptcy.
However, GM beat analyst expectations, posting earnings of 29
cents a share, compared with the expected 3 cents a share,
according to FactSet. Revenue rose to $37.4 billion from $36.9
billion.
"Our revenue and cash flow improved this quarter and our
underlying business performance remains on plan," GM Chief
Financial Officer Chuck Stevens said.
The results suggest the auto maker's strategy to sell its newest
models at higher prices and hold the line on incentives despite
giving up some market share may be working. GM's executive team
won't bend on pricing even as some dealers have complained higher
prices are keeping customers on the sidelines.
The auto maker's U.S. market share fell to 17% from 17.7% a year
earlier, while its worldwide share slipped to 11.1%
In North America, operating profit fell to $557 million,
reflecting a $1.3 billion charge the company took to cover the
costs associated with recalling more than 7 million cars worldwide,
2.6 million of which were connected to faulty ignition
switches.
GM said it has spent $700 million on replacement switches and
cylinders and $600 million on other recall items. The charges
weren't considered special items. Replacement parts began flowing
to dealers earlier this month. In all, the recall lowered GM's
results by 48 cents a share during the quarter.
Meanwhile, GM's South America loss widened to $156 million from
$38 million a year earlier due to lower sales and currency changes.
The problematic European division also reported a larger loss of
$284 million compared with $152 million a year earlier.
Profit at the international operations declined to $252 million
in the first quarter from $472 million a year earlier.
Write to Jeff Bennett at jeff.bennett@wsj.com.
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