Profits down but GM still buoyant
BY TIM NICHOLSON | 29th Jul 2013
GM posted a second quarter net income of $US1.2 billion ($A1.3b), down from the $1.5 billion profit posted in the same March-to-June quarter last year, while earnings before interest and tax (EBIT) totalled $2.3 billion, up from $2.1 billion March-to-June 2012.
Continued demand for light commercial trucks in GM’s largest market, the US, ensured a solid result on its home turf, with pre-tax earnings of $1.97 billion, up from $1.89 billion in quarter two, 2012.
Sales jumped in the North American market from March to June, with GM selling 809,000 vehicles, almost 50,000 more units than the same period last year.
South America’s booming automotive market gave GM a $54 million boost, up from $16 million pre-tax earnings in the same period in 2012, thanks in part to an increase in sales from 265,000 last year to 278,000 in quarter two this year.
Despite ongoing economic woes throughout Europe, GM managed to reel in its losses in the region by recording a second quarter pre-tax loss of $110 million, significantly less than the $394 million it hemorrhaged in last year’s second quarter.
The improvement in Europe comes despite a drop in sales from 290,000 cars in the second quarter of last year, to 276,000 this year.
GM chief financial officer Dan Ammann told US publication Autonews the narrowed losses in Europe came down to more effective management of production capacity and cost containment.
Pre-tax profit for GM International Operations, which includes China, South-East Asia, Russia and Australia, fell by $399 million to $228 million in the second quarter.
Sales in the region dropped by 27,000 units between March and June this year compared to last year, with 268,000 GM vehicles finding homes in the period.
Mr Ammann said price pressures in the region were to blame for the slide, adding “challenges with competitive pressure as a result of the (weaker) yen, particularly in South-East Asia” as well as Australia.
GM’s finance arm recorded pre-tax income of $254 million, an increase over the previous year’s result of $217 million.
Overall net revenue for the quarter reached $39.1 billion, a $1.5 billion improvement over the quarter two, 2012 result of $37.6 billion.
While continued profit making is good news for GM, its half-yearly figures are down with net income of $2.2 billion for the first six months of the year, revealing a drop of $300 million on the last year’s $2.5 billion first-half result.
Fellow Detroit based car-maker Ford last week posted a March to June pre-tax profit of $2.6 billion for its 16th consecutive profitable quarter, edging out GM by $300 million.
GM chairman and CEO Dan Akerson highlighted the strong results in Europe and North America, while looking to the second half of the year for further growth.
“We continue to perform well in the world’s two most important markets, the US and China,” he said. “We also made further progress in our European business and saw the steady performance of our global brands Chevrolet and Cadillac.
“For the rest of the year, we’ll focus on winning customers with high-quality vehicles at a compelling value.”
