Wednesday April 30, 05:22 PM
GM posts $3.3bln loss amid weak US market
CHICAGO (AFP) - General Motors (NYSE: GM - news) reported Wednesday a first-quarter loss of 3.3 billion dollars, citing weakness in the domestic auto industry and special charges.
The biggest US automaker said the loss amounted to 5.74 dollars per share. But the results were better than expected with one-time charges excluded.
Excluding exceptional items, the automaker posted a loss of 350 million dollars, or 62 cents per share, far better than market expectations of 1.54 dollars, and helped rev up interest in GM shares.
"The results may not be immediately comparable to the more sizeable loss analysts were expecting, but are still attracting attention" from investors, Briefing.com analysts wrote in a client note.
GM shares shot up 8.77 percent to 23.06 in late morning New York trade.
Total revenue in the first quarter fell slightly to 42.7 billion dollars from 43.4 billion on lower North America automotive and financial services and insurance revenue.
Revenue at GM's North America (GMNA) division fell to 24.5 billion dollars from 28.1 billion.
On Monday, GM announced it was cutting back production of pickup trucks and sport-utility vehicles because of weakening demand in the US market for the gas guzzlers amid soaring gasoline prices.
GM cut its 2008 US total industry seasonally adjusted annual rate outlook "to the mid to high 15 million unit range," down from the low 16 million unit range.
The struggling automaker said it had combined earnings before taxes of one billion dollars in GM Latin America, Africa and Middle East (GMLAAM), GM Asia Pacific (GMAP) and GM Europe (GME), which more than offset a loss at GM North America.
"We continue to leverage our global product portfolio to take advantage of tremendous growth in key emerging markets, while at the same time taking the appropriate actions to deal with the challenging economic conditions in the US," said GM chairman and chief executive Rick Wagoner.
GM took a non-cash charge of 2.9 billion dollars linked to several items.
Nearly half of the charge, 1.45 billion dollars, was for the depreciation of its former financial services subsidiary, GMAC (NYSE: GOM - news) , which has been hard hit by the global credit squeeze.
GM retains a 49 percent share in the unit after selling 51 percent to a consortium led by private equity firm Cerberus in 2006.
The provision also includes a charge of 731 million dollars to increase the company's liability for estimated costs associated with Delphi (DPHIQ.PK - news) 's bankruptcy and restructuring efforts.
The auto parts maker was spun off from GM in 1999, but remains the auto giant's largest parts supplier. GM and Delphi have conducted tough negotiations, covering pay rates, health care and pension benefits, with union groups in the past year in a bid to improve Delphi's fortunes.
GM also took a charge of 324 million dollars for restructuring its activities in its North America and Europe divisions, and 394 million linked to taxes.
The group had a 2007 full-year net loss of nearly 39 billion dollars.
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