Trucks, SUVs Power GM to Record Second-Quarter Profit

Riding a continuing wave of popularity for pickup trucks and sport-utility vehicles, General Motors Corp. reported record second-quarter earnings Tuesday and is on track to set a record for revenue and earnings per share for the full year.

GM earned $1.75 billion, or $2.93 a share from continuing operations, on $48.7 billion in revenue, up from $1.73 billion, or $2.66 a share, on $45.1 billion in sales in the last record second quarter a year ago. The average forecast by analysts, surveyed by First Call/Thomson Financial, was $2.82 a share.

A strong auto market and profit from financial services are likely to pace GM to another record year of revenue and per-share earnings of about $9.85, Chief Financial Officer Mike Losh said.

“The key is whether we get there or not on a net-income basis,” Losh said. “We’ve got a shot at that too.”

Continuing the pattern of recent years, GM’s performance remains heavily dependent on trucks, with sales of pickups, SUVs and minivans growing 7.1% during the first six months of the year, while GM’s passenger car sales fell 1.8%, according to industry tracker Autodata Corp.

Profit in the core North American business fell 4.7% from a year ago, from $1.48 billion to $1.41 billion. But a turnaround in Latin America, decreased losses at GM’s Hughes Electronics unit and strong sales of trucks, which earn GM up to $15,000 per vehicle, drove the record earnings.

GM stemmed losses at Hughes from $92 million to $64 million, thanks mainly to growth in Hughes’ DirectTV satellite television service, while profit at the GMAC finance unit rose marginally, up $4 million to $395 million.

Analysts are upbeat about the earnings prospects for the world’s No. 1 auto maker despite GM’s U.S. year-over-year sales slumping 1.9% in April, 2.1% in May and 5.5% in June.

Increased truck production including the start-up of new heavy-duty and diesel-powered versions of the Sierra and Silverado pickups will boost GM’s profit further in the rest of the year, said Greg Salchow, auto analyst at the investment bank Raymond James & Co. in Detroit.

“In the second half, you’ll have the heavy-duty pickups getting to the marketplace, and you’ll start seeing production of some of the other sport-utilities being converted to the new [pickup] platform, such as the upcoming 2001 GMC Denali,” Salchow said.

GM shares rose 44 cents to close at $60.81 on the New York Stock Exchange. The stock has declined 16% this year.

At a Glance

Other earnings, excluding one-time gains or charges unless noted, include:

FINANCIAL SERVICES

* Jefferies Group Inc. said earnings from continuing operations fell 16% to $12.4 million, or 51 cents a share, as revenue from corporate finance dropped. Total revenue rose 4% to $182.6 million.

* Merrill Lynch & Co.’s second-quarter earnings climbed 34% to $902 million, or $2.01 a share, far exceeding analyst estimates of $1.71 a share, on gains from trading and investment banking. Net revenue rose 24% to $6.7 billion. Merrill also said it plans a 2-for-1 stock split.

* Charles Schwab Corp.’s second-quarter profit increased 16% to $199 million, or 14 cents a share, in line with estimates. Revenue jumped 26% to $1.4 billion.

* Wells Fargo & Co.’s profit grew 12% to $1.04 million, or 63 cents a share, in its second quarter on venture capital gains, fees from managing trusts and increased lending. The results matched analyst expectations. The San Francisco-based bank’s revenue was up 11% to $4.56 billion.

OTHER INDUSTRIES

* Boston Scientific Corp. said second-quarter profit rose 12% to $122 million, or 30 cents a share, beating estimates by 2 cents, as sales declined 4.3% to $695 million. But the medical devices maker lowered earnings forecasts for the full year, saying sales will remain sluggish.

* Guidant Corp. said second-quarter profit rose 22% to $124.3 million, or 40 cents a share, matching forecasts, boosted by demand for devices that control heart rhythm. Sales rose 9% to $668.4 million.

* Honeywell International Inc. said second-quarter profit rose 13% to $605 million, or 75 cents a share, meeting reduced estimates. Sales rose 5.9% to $6.31 billion.

* Newport News Shipbuilding Inc. said its second-quarter earnings rose 20% to $24 million, or 74 cents a share, beating analyst expectations of 71 cents, as sales rose 20% to $532 million.

* Philip Morris Cos. said second-quarter earnings rose 5.5% to $2.17 billion, or 95 cents a share, meeting analyst estimates, reflecting stronger-than-expected U.S. cigarette shipments and growth in its international food and tobacco businesses. Sales rose 5.2% to $20.84 billion. The company benefited from higher prices in the U.S. for its cigarettes. Profit at the Kraft Foods unit rose 5.3% and profit at Miller beer grew 8.4%.

* Weyerhaeuser Co.’s second-quarter earnings climbed 74% to $285 million, or $1.25 a share, well beyond expectations of $1.19 a share, on strong performance in its paper products and real estate divisions and recent acquisitions.

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Bloomberg News and Reuters contributed to this report.