GM Posts Operating Profit but a Net Loss : Autos: Its second-quarter income is $392 million. However, a $749-million write-off connected with Hughes Aircraft results in $357 million in red ink.

TRAVERSE CITY, Mich. — Citing stronger sales to U.S. dealers and progress on internal cost cutting, General Motors Corp. on Thursday posted its best quarterly operating profit in two years.

The world’s largest auto maker earned $392 million on its ongoing operations, contrasted with a loss of $785 million last year.

But the second-quarter profit was offset by a one-time restructuring charge, resulting in an overall loss of $357 million for the quarter. The $749-million charge covered the previously announced downsizing of Hughes Aircraft Co., a division of GM subsidiary Hughes Electronics Corp.

GM’s loss amounted to 66 cents a share.

Although the company does not report its North American earnings separately, analysts said GM continued to hemorrhage cash from its core North American automotive operations.

Still, it made more money on its operations in the second quarter than it did in the first, when it posted a profit of $179 million. And industry analysts said the most recent results show that the auto giant--which lost a record $4.5 billion last year--is slowly regaining its financial health.

“The fact that there was a big year-over-year swing and an improvement over the first quarter is heartening,” said Douglas Laughlin, an analyst at Bear, Stearns & Co. in New York. “The appearance is there that they continue to make progress, but it’s hard to do, given the lack of economic recovery.”

Though GM sold 12% more cars and trucks to dealers in North America than in 1991, the company has continued to rely on its non-automotive subsidiaries and its European car operations to offset losses in North America.

David Garrity, an analyst at McDonald & Co., a Cleveland-based investment consulting firm, estimates that GM lost $1.3 billion on its North American automotive operations in the second quarter, compared to $2.3 billion in the 1991 period.

Last December, General Motors announced a massive restructuring--including closing 21 plants and slashing its work force by 74,000--to staunch the flow of red ink in North America. And in April, the company’s board announced a top-level management shake-up in an effort to spur the lumbering auto manufacturer into moving more quickly.

While the earnings report indicates that GM is making progress, several analysts expressed dismay at Chief Financial Officer William Hoglund’s remarks Wednesday that further plant closing announcements were unlikely until next year.

“Hoglund’s remark raises a distinct question in the investor’s mind about how strongly management is committed to the changes that need to be made,” said analyst Garrity.

So far, GM has named 14 of the 21 plants that are to be closed to eliminate costly and unnecessary production capacity. If the company backed off its plan to shutter the remaining seven plants, it would signal a change in its stated strategy of pursuing profits over market share.

In May, GM completed the sale of $2.2 billion in common stock--the second-largest public offering on record--using its restructuring plans as a major selling point.

Though GM, Ford and Chrysler posted combined second-quarter earnings of $1.1 billion, contrasted with losses of $1.3 billion in the same period last year, executives at each of the Big Three have expressed pessimism recently on the outlook for this year’s second half.

GM Chairman Robert C. Stempel said Wednesday that sustaining the rate of progress GM achieved in the first half of the year would be “extremely challenging.”

“The latter half of the year could be difficult in view of uncertainties related to the pace of economic recovery in North America and a slowdown in some major European markets,” Stempel said.

The third quarter is usually the weakest for the auto industry as plants are shut down to retool for the production of new models. But despite the painfully slow economic recovery, sales of cars and trucks have continued to pick up, and analysts expect each of the Big Three to be profitable for the full year.

Before the write-off, GM’s earnings came to 31 cents a share on sales of $35.2 billion. The loss after the write-off amounted to 66 cents a share. That compared to a loss of $1.44 a share on revenue of $31.3 billion in the 1991 period.

The auto maker’s computer services and data processing subsidiary, Electronic Data Systems, recorded a profit of $157 million for the second quarter. EDS said the 12% improvement over the second quarter of last year resulted largely from an increase in business to customers other than GM.

GM Hughes Electronics lost $585 million in the period, including the special charge for the restructuring of Hughes Aircraft.

General Motors Acceptance Corp., GM’s finance subsidiary, posted second-quarter earnings of $287 million, up from $283 million in the 1991 period.

General Motors Earnings

Quarterly net earnings including one-time gains and losses.

2nd qtr 1992: -$357 million