WASHINGTON -- Benefiting from a healthy rise in car and truck sales and its recent cost-cutting moves, General Motors Corp. yesterday reported stronger than expected first-quarter profits.
GM posted a 66 percent jump in earnings for the January to March period, to $854 million, or 81 cents a share, compared with $513 million, or 42 cents a share, in the same period last year. The increase came despite a one-time charge of $758 million, equal to $1.05 a share, for a change in accounting for employee disability benefits.
Eliminating the accounting change, GM would have posted consolidated net income of $1.6 billion, equal to $1.86 a share.
Revenue rose 8.4 percent to $37.5 billion from $34.6 billion.
The after-tax charge took a big bite out of GM's North American Automotive Operations, a division that company executives say is critical to GM's turnaround efforts. The company reported that $708 million of the $758 million charge came against its unit responsible for the U.S. auto market.
As a result, the North American operation, or NAO as it is commonly referred to, posted a net loss of $197 million for the quarter. Without the charge, it would have posted a profit of $511 million, compared with a loss of $170 million in the same period last year.
"NAO's performance shows we're on track to meet the 1994 objective for our key North American Operations -- to be profitable at the net income level," said John F. Smith Jr., president and chief executive.
Mr. Smith, however, expressed some disappointment at the unit's operating profit margin of 2.1 percent in the quarter. Although "we're pleased with the improvement," it falls short of the "superior margins we are looking for in a strong sales environment," he said.
GM is scheduled to roll out nine all-new models for the U.S. market before the end of 1994.
GM captured 33.5 percent of the total U.S. vehicle market during the quarter, up slightly from 33.1 percent in the same part of 1994.
Two of GM's three nonautomotive subsidiaries contributed to the first-quarter gains. Electronic Data Systems posted a 13.9 percent gain in net income and GM Hughes Electronics Corp. posted a 65 percent gain in operating profit.