GM quarterly earnings drop but beat Wall Street estimates
Wednesday, April 18th 2001, 12:00 am
By: News On 6
DETROIT (AP) _ General Motors Corp.'s net earnings plunged 87 percent in the first quarter as a nagging slowdown in U.S. auto sales chewed into profits, though the results still handily beat Wall Street's expectations.
The world's biggest automaker earned $237 million, or 53 cents a share, in the January-March period, down sharply from $1.78 billion, or $2.80 a share, a year ago.
The latest results include $12 million, or 3 cents a share, from the adoption of an accounting change relating to the treatment of derivatives. The resulting 50 cents a share easily surpassed the 26 cents per share expected by analysts surveyed by Thomson Financial/First Call.
In early trading on the New York Stock Exchange, GM shares rose $1.72 cents to $55.35.
Revenues totaled $42.6 billion, down from $46.9 billion in the same quarter last year, when U.S. sales were headed for a record.
GM said its automotive operations earned $20 million, compared with $1.5 billion a year ago. GM's North American unit saw its earnings drop, from $1.3 billion to $120 million. Over the first three months of this year, GM's U.S. sales are down 7 percent from a year ago.
U.S. sales by major domestic automakers have slid for six consecutive months, prompting them to slow production to trim bloated inventories. GM cut production by 21 percent in the first quarter, with plans to pare output by 17 percent from this month through June.
``Our first-quarter performance was better than expected, considering significantly reduced production volumes in North America,'' GM Chairman Jack Smith said.
Other GM units around the world posted mixed results. GM's Latin America/Africa/Mid-East unit earned $6 million, $5 million more than a year ago. But GM's European business lost $86 million, versus earnings of $221 million last year.
GM's finance arm, GMAC, saw its earnings rise, from $397 million to $431 million. The automaker said GMAC's performance and lower costs in the North American automotive business only partly offset the effect of lower vehicle sales and intense pricing pressures in North America and Europe.
Ford Motor Co., the world's second-largest automaker, reports its first-quarter earnings Thursday.