Tags: US | Earns | GM

GM Turns $1.33 Billion Profit in Sign of Growing Strength

Thursday, 12 Aug 2010 07:45 AM

General Motors Co. said Thursday it made $1.33 billion in the second quarter, a sign it's getting healthier as it prepares to sell stock to the public.

It was the second straight quarterly profit for GM, which made $865 million in the first quarter.

CEO Ed Whitacre said last week that the company is eager to sell its shares in an initial public offering so it can end its dependence on the government and pay off $43.3 billion in bailout funds that were converted into a majority stake in the company.

The U.S. government has owned a 61 percent stake in GM since the company left bankruptcy protection in July 2009.

GM's second-quarter revenues totaled $33.2 billion, up 5.3 percent from the first quarter on growing sales in every region except Europe. In the U.S., GM saw strong sales of new and redesigned models like the Chevrolet Equinox wagon and Buick LaCrosse sedan.

GM said it earned $2.55 per share for the quarter. GM didn't report second-quarter results last year because it spent part of the quarter in bankruptcy protection, but on Thursday, GM said it lost $12.9 billion in the second quarter of 2009, or $21.12 per share.

Before this year's first-quarter results, GM hadn't reported a profit since the second quarter of 2007.

GM ended its latest quarter with $32.5 billion in cash, down from $36 billion in the first quarter.

GM has been working to streamline operations and slash costs. It has shed four brands, changed leadership and last week announced its U.S. dealership network would number 4,500, about 25 percent smaller than it was in early 2009.

But it still faces hurdles. GM's U.S. sales rose 14 percent in the first six months of this year compared to the same period in 2009, according to AutoData Corp. That was slightly less than the average industry increase of 17 percent. GM had the highest incentive spending of any major automaker at $3,691 per vehicle, almost $1,000 more than the industry average, according to Edmunds.com.

GM has also relied heavily on sales to rental-car, government and corporate fleets, which are less profitable than sales to individual customers. Retail sales — or sales to individuals — were up 11 percent industry wide through June, but up only 1 percent at GM.

GM is the last of the Detroit automakers to report second-quarter results. Ford Motor Co. made $2.6 billion, its fifth straight quarterly profit. Chrysler Group LLC, which got $15.5 billion in federal aid, narrowed its second-quarter loss to $172 million.

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General Motors Co. said Thursday it made $1.33 billion in the second quarter, a sign it's getting healthier as it prepares to sell stock to the public. It was the second straight quarterly profit for GM, which made $865 million in the first quarter. CEO Ed Whitacre said...
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