Asian Sales Bolster Earnings at GM
General Motors Corp. earned $1.28 billion in the first quarter as the company boosted vehicle sales in China and profit from car loans and insurance climbed. The world’s largest automaker raised its 2004 earnings forecast.
Net income fell 14% to $2.25 a share from $2.71, or $1.48 billion, a year earlier, when the sale of a military business generated one-third of profit. Sales rose 1.3% to $47.8 billion, the Detroit-based company said.
Asian earnings almost quadrupled and finance-unit profit rose 12% to $768 million. That helped GM Chief Executive G. Richard Wagoner Jr. overcome losses in Europe and a profit decline in North America, where the company spent the most ever on rebates and low-interest loans.
“The earnings are impressive and comforting, but we’re not seeing the improvement in the auto business we’d like to see,’ said Andrew Palmer, who manages $2 billion, including GM debt, for Washington-based ASB Capital Management.
Shares of General Motors rose $1.62, or 3.5%, to $47.77 on the New York Stock Exchange, the biggest percentage increase since Dec. 22. The shares have climbed 35% in the last year.
General Motors, maker of the Chevrolet Silverado pickup truck and Cadillac Escalade sport utility vehicle, raised its 2004 earnings excluding certain costs to $7 a share from a range of $6 to $6.50. Better-than-expected sales in Asia, a rebounding U.S. market, a lower tax rate and improving profit at the finance unit, General Motors Acceptance Corp., are helping, the company said.
The company’s share of the U.S. car and light-truck market rose two-tenths of a percentage point to 27% in the quarter, making it the only U.S.-based automaker to gain. Toyota Motor Corp.’s U.S. market share rose 1 percentage point to 11.9%, and Nissan Motor Co.’s climbed 1.4 points to 6.1%.
Analysts had been expecting General Motors to earn $1.79 a share in the first quarter, according to Thomson First Call. Excluding results from the company’s Hughes Electronics unit and a $505-million gain from the sale of a military business to General Dynamics Corp., earnings in the same quarter a year earlier were $1.03 billion, or $1.84 a share.
General Motors’ North American profit fell to $451 million from $548 million a year earlier after the automaker cut production 7.3% and increased spending on rebates and no-interest loans.
GM spent $4,388 per vehicle on incentives in the U.S. during the quarter, the most ever by an automaker and about $1,500 more than Japan’s Toyota, according to CNW Marketing Research.
Profit in the Asia-Pacific region rose to $275 million in the quarter from $75 million, representing 21% of total net income.
Last year General Motors sold 386,000 vehicles in China, representing 4.5% of the company’s total unit sales. Profit from China in 2003 more than tripled to $437 million.
