GM Net Income Rises 49%
General Motors Corp., the world’s largest automaker, said second-quarter profit rose 49% as it boosted income from car loans and from selling vehicles in North America and Asia.
Net income increased to $1.34 billion, or $2.36 a share, from $901 million, or $1.58, a year earlier, the Detroit-based company said. Sales rose 7.1% to $49.1 billion.
A record quarter by GM’s finance businesses accounted for about two-thirds of profit. Automotive earnings rose almost fourfold, helped by lower costs in North America and rising market share in China. The European unit’s loss widened, and Chief Executive Rick Wagoner said the automaker needed more new models and lower costs in the region.
“GM’s automotive profit was a little light in the quarter, and its finance unit picked up the slack,” said Dan Poole, vice president of equity research at Cleveland-based National City Corp., which manages $23 billion, including GM shares.
GM exceeded the average estimate of $2.24 a share from analysts surveyed by Thomson First Call.
The company’s shares fell 25 cents to $43.35 on the New York Stock Exchange.
GM, which is trying to stem U.S. market share losses to Asian carmakers led by Toyota Motor Corp., reiterated its $7-a-share full-year profit target and said it expected to earn 75 cents to $1 a share in the third quarter, excluding some costs and gains.
Automotive profit rose to $529 million from $140 million, with increases in North America and Asia. GM said its market share in the Asia-Pacific region rose to 5.4% from 4.8% a year earlier, as first-half sales in China increased 58%.
Net income from North America, its biggest market, rose to $328 million from $83 million. Most of the improvement was from cost reductions, with help from an increase in prices paid for its cars and trucks, Chief Financial Officer John Devine said. The second quarter of 2003 was the second worst for the region in almost four years.
“While earnings at GM North America improved, overall sales, market share and financial results were below our expectations,” Wagoner said in a statement. In Europe, “we’re not getting the revenue growth that we hoped for.”
In the U.S., GM’s share of car and light-truck sales dropped 1.1 percentage points to 26.7% in the quarter, according to Autodata Corp., as new models such as the Chevrolet Equinox and industry-high incentives failed to boost sales to individuals. The company’s inventory of unsold vehicles rose to a near-record 1.35 million vehicles at the end of June.
