GM Profit Dips Slightly, but Beats Forecasts on Strong Sales

General Motors Corp. on Thursday said profit declined slightly but exceeded Wall Street forecasts in the first quarter as incentives helped boost sales of cars and light trucks.

The world’s largest auto maker earned $1.78 billion, or $2.80 a share, compared with analysts’ consensus forecast of $2.66, as compiled by First Call/Thomson Financial. In the year-earlier quarter, GM earned $1.82 billion, or $2.68 a share, when there were more shares outstanding.

Revenue rose 10% to $46.86 billion. GM benefited from strong sales industrywide and from its push to sell more high-profit vehicles such as pickup trucks and sport-utility vehicles, analysts said.

“We kept our momentum going in the first quarter,” Chairman and Chief Executive Jack Smith said. “Record market demand in North America and Europe was accompanied by unrelenting competitive pressures, while economic conditions continued to affect markets in Latin America and Asia-Pacific regions.”

GM’s vehicle sales in the profitable U.S. market rose 9.2%, paced by strong demand for high-margin gas-guzzlers such as the Chevy Silverado pickup, the Chevy Blazer SUV and the Cadillac Escalade SUV, as well as the Cadillac DeVille luxury sedan. The company said it expects this year’s industry total to come close to last year’s record of 16.9 million light vehicles.

GM Chief Financial Officer J. Michael Losh told analysts Thursday that GM’s earnings also were helped by cost-cutting, but hindered somewhat by higher engineering costs, a more expensive labor contract and the cost of expanding the OnStar cellular service. Weakness in GM’s Hughes electronics unit also hurt results.

Outside North America, GM’s fortunes improved. Profit grew 27% in the European automotive business, even as GM faced continued heavy competition and a fierce pricing environment.

GM’s Latin America/Africa/Mideast unit and its Asia-Pacific division had small profits after reporting losses in the same quarter a year ago.

Powered by stable vehicle prices, high employment levels and strong consumer confidence, U.S. car and light-truck sales in the first quarter ran at an annual rate of 18.3 million, far above the 16.4 million annual rate in the first quarter of 1999, a year that produced record sales.

Ford Motor Co. is to report quarterly earnings April 17. DaimlerChrysler will announce preliminary results at its annual meeting April 19 in Berlin.