General Motors posts $3.2 billion 1st-quarter profit
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General Motors posted a $3.2 billion profit in the first quarter, its first full quarter as a public company. It completes a trifecta of strong reports by the Detroit Three: Ford posted a $2.6 billion profit and Chrysler said it earned $116 million, its first quarterly profit since its 2009 bankruptcy bailout.
Sales were $36.2 billion, up $4.7 billion or 15% from the quarter a year ago, GM said. That was driven by a 25% gain in U.S. auto sales and sales still up 10% in China, GM's biggest market, even though China's overall rapid auto growth is slowing. Net income per share was $1.77.
The profit was boosted by some one-time gains, particularly the sales of GM's stake in Delphi, its former parts unit, and its preferred shares of Ally Financial, the former GMAC captive finance unit. But even excluding those items, profit was $2 billion before interest and taxes, beating analysts expectations of about $1.6 billion and up from $1.7 billion in the quarter a year ago.
It was a fifth consecutive profitable quarter, if you include quarters before it became a public company last November.
Helping results in the USA were strong sales of key new models, including Chevy's new Cruze compact, which broke into the top 10 list of best-selling vehicles for the first time in April.
Also, the struggling GM Europe unit managed to reach break even in the quarter -- "an important milestone," CFO Daniel Ammann said in a CNBC interview.
GM said it sees results continuing to show "solid improvement" through the remainder of the year, even with rising materials costs and higher gas prices. And it sees "no material impact" on its 2011 results from the Japan crisis.
GM has stayed ahead of higher costs so far with price increases, as well as reduced incentives in March after being very aggressive in January and February. Amman said another price increase may come this summer, He said GM hasn't seen shopper resistance to higher prices yet.
Amman also gave little hope for lower gas prices, saying that GM forecasters' "assumption is that gas prices will stay elevated" through the rest of the year.
That's actually good news for GM and most other automakers. The industry has been adding more smaller cars and engines to lineups as it strives to comply with tightening federal mileage rules. Higher gas prices help keep those smaller cars and smaller engines moving off the lots and selling for top dollar.
GM improved its cash position in the quarter, ending with cash and marketable securities of $30.6 billion compared with $27.6 billion at the end of 2010.
"GM has great potential to deliver profitable growth around the world as the recovery continues," Amman said in a statement with GM's earnings release. "While we're encouraged, we keenly recognize we have more opportunities to leverage our scale, improve spending and investment efficiencies, and optimize our strong balance sheet."
More details from GM's full earnings release:
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- Net income of $1.77 per share including a net gain from special items of $0.82 per share
- EBIT of $3.5 billion and EBIT-adjusted of $2.0 billion
- GM Europe achieves breakeven results on an EBIT-adjusted basis
DETROIT – General Motors Company (NYSE: GM) today announced first quarter net income attributable to common stockholders of $3.2 billion, or $1.77 per fully-diluted share, marking the company's fifth consecutive profitable quarter. Revenue increased $4.7 billion to $36.2 billion, compared with the first quarter of 2010.
"We are on plan," said Dan Akerson, chairman and CEO. "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."
Net income attributable to common stockholders includes gains of $1.6 billion and $0.3 billion respectively related to the sales of the company's ownership interest in Delphi Automotive LLP and Ally Financial Inc. preferred stock. It also includes a $0.4 billion goodwill impairment charge at GM Europe (GME) resulting from a change in accounting standards and charges totaling $0.1 billion at GM International Operations (GMIO) related to revised tax regulations affecting the company's India joint venture. Combined, these special items increased net income attributable to common stockholders by $1.5 billion or $0.82 per fully-diluted share.
Earnings before interest and tax (EBIT) were $3.5 billion. EBIT adjusted to exclude special items was $2.0 billion compared with $1.7 billion in the first quarter of 2010.
GM Results Overview (in billions except for per share amounts)
Q1 2010/Q1 2011
Revenue: $31.5/$36.2
Net income attributable to common stockholders: $0.9/$3.2
Earnings per share (EPS) diluted: $0.55/$1.77
EBIT: $1.8/$3.5
Less special items: $0.1/$1.5
EBIT – adjusted: $1.7/$2.0
Impact of special items on EPS diluted: $0.08/$0.82
Automotive net cash flow from operating activities: $1.9/$(0.6)*
Automotive free cash flow: $1.0 /$(1.9)*
* Includes $2.5 billion negative impact related to wholesale advance financing agreement termination
GM North America (GMNA) reported EBIT of $2.9 billion compared with $1.2 billion in the first quarter of 2010. On an EBIT-adjusted basis, GMNA increased its earnings by $0.1 billion to $1.3 billion compared with the first quarter of 2010. The company expects GMNA's quarterly EBIT-adjusted results to improve on average for the remainder of the year compared with the first quarter as better pricing and improved fixed cost should more than offset commodity cost increases and unfavorable mix.
GME reported EBIT of $(0.4) billion. GME's results improved by $0.6 billion on an EBIT-adjusted basis compared with the first quarter of 2010 and it achieved a significant milestone by delivering breakeven results on that basis. Based on current plans, GME is targeting to achieve breakeven results on an EBIT-adjusted basis before restructuring for the entire year.
GMIO reported EBIT of $0.5 billion compared with $0.9 billion in the first quarter of 2010. On an EBIT-adjusted basis, GMIO earned $0.6 billion in the first quarter, a decline of $0.3 billion compared with the first quarter of 2010.
GM South America (GMSA) reported EBIT of $0.1 billion, down $0.2 billion from the first quarter of 2010. There were no adjustments in either period.
GM expects that full-year 2011 EBIT-adjusted results will show solid improvement over 2010. GM continues to expect no material impact on full-year results from the Japan crisis.
For the quarter, automotive cash flow from operating activities was $(0.6) billion and automotive free cash flow was $(1.9) billion. Both figures include the $2.5 billion cash impact of GM's decision, announced in October 2010, to end a wholesale advance agreement with Ally Financial.
GM ended the quarter with very strong total liquidity of $36.5 billion. Cash and marketable securities were $30.6 billion compared with $27.6 billion at the end of the fourth quarter of 2010.
"GM has great potential to deliver profitable growth around the world as the recovery continues," said Dan Ammann, senior vice president and CFO. "While we're encouraged, we keenly recognize we have more opportunities to leverage our scale, improve spending and investment efficiencies, and optimize our strong balance sheet."
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