GM notches up another profit

A RESURGENT General Motors has announced a $US3.2 billion ($A3b) first-quarter net profit, continuing its run of five straight quarters in the black since emerging from chapter 11 bankruptcy.

More than triple last year’s first-quarter net profit of $US865 million ($A808m), the GM result eclipsed rival Ford’s 2011 Q1 result of $US2.6 billion ($A2.4b).

However, the GM balance sheet included $US1.5 billion ($A1.4b) from the sale of preferred shares in its Delphi component business and its former GMAC finance division, Ally Bank in the US, where earnings were otherwise flat compared with last year.

The profit came as GM lifted its global quarterly vehicle sales by 11 per cent to 2.2 million, putting it on track to top nine million vehicles in 2011 and almost certainly regain its number one sales crown from earthquake-hit Toyota.

GM’s Q1 sales revenue was $36.2 billion, up $4.6 billion or 1.4 per cent on last year. This compares with Ford’s $33.1 billion, up $5 billion.

GM chairman and CEO Dan Akerson said: “We are on plan. GM has delivered five consecutive profitable quarters, thanks to strong customer demand for our new fuel-efficient vehicles and a competitive cost structure that allows us to leverage our strong brands around the world and focus on driving profitable automotive growth.”

Left: GM's Renaissance Centre headquarters in Detroit.

The company revealed that its North American vehicle sales increased by 21.2 per cent, to 684,000 vehicles, over the deflated figures of a year ago, while GM International Operations – which includes its Chinese, South Korean and Australian operations – increased its vehicle sales by 8.2 per cent.

While GM’s European division improved its sales volumes and revenues, it still lost $390 million in earnings before tax and interest, mainly due to a one-off charge of $400 million. However, that was an improvement from a loss of $477 million for the same period of 2010.

In the United States, GM lifted its market share from 18.4 per cent to 19 per cent, while also raising its estimated worldwide share from 11.1 per cent to 11.5 per cent.

More tellingly, GM’s factories in North America ran at 99.1 per cent capacity in the January-March quarter, compared with 85.1 per cent.

GM ended the quarter with $36.5 billion in cash, compared with $27.6 billion at the end of the fourth quarter of 2010.

GM CFO Dan Ammann said the company had great potential to deliver profitable growth around the world as the recovery continued.

“While we’re encouraged, we keenly recognise we have more opportunities to leverage our scale, improve spending and investment efficiencies, and optimize our strong balance sheet,” he said.

GM recently reported a full-year 2010 profit of $4.7 billion – its first year in the black since 2004.

The profit ended a string of losses totaling $90 billion, which would have brought the company down in the global financial crisis had the United States and Canadian governments not stepped in.

The US Treasury still holds a 26 per cent stake in GM as a result of the bailout, after selling about half of its shareholding in a share offer.