GM earnings increase to 2nd-quarter record

Truck sales, Europe boost profit fivefold over strike-weakened '98 period

July 21, 1999|By BLOOMBERG NEWS

DETROIT -- General Motors Corp. said yesterday that U.S. sales of high-profit pickup trucks and rising market share in Europe increased its earnings fivefold from those in last year's strike-weakened second quarter.

Profit from continuing operations climbed to a second-quarter record of $1.73 billion, or $2.66 a share, from $350 million, or 47 cents per share. The results exceeded the average analyst forecast of $2.56 a share, based on a First Call Corp. survey. Revenue rose 21 percent to $45.1 billion.

Profit from U.S. trucks such as the Silverado and Sierra helped GM cover discounts on other models and weather losses in Asia and Latin America. GM built 1.54 million vehicles in the United States, its highest second-quarter output in five years and about a third more than the year-earlier period.

Analysts said they're concerned about the profit outlook when the pace slows. "The question in our minds is how sustainable their volumes are, given that they've been aided and abetted by a white-hot industry," said Nicholas Lobaccaro, a Lehman Brothers analyst. "Future production schedules may not be as strong."

GM fell $1.81 to $66.50. The company's stock has risen 12 percent this year, while that of rivals Ford Motor Co. and DaimlerChrysler AG have declined. Ford said last week that its profit from operations rose 4.3 percent, beating forecasts. DaimlerChrysler will report July 29.

GM's North American auto operations earned $1.47 billion, compared with a loss of $194 million in the year-earlier quarter, when United Auto Workers strikes at two Michigan parts factories shut down most North American assembly plants.

European profit rose 51 percent to $187 million from $124 million. GM's German-based unit Adam Opel AG unit is gaining market share in Europe with sales of the new Astra compact car and the Zafira small van. GM Europe's market share rose to 10 percent from 9.2 percent in the year-earlier period.

In Latin America, Africa and the Middle East, GM lost $38 million, compared with a year-earlier profit of $48 million. The loss in the Asia-Pacific region widened to $81 million from $36 million a year earlier. Demand in Asia and Latin America has been dampened by economic problems.

The Hughes Electronics unit reported yesterday a loss from operations of $97.6 million, or 23 cents a share, compared with net income of $50.8 million, or 14 cents, because of higher costs and manufacturing delays.

General Motors Acceptance Corp., a consumer finance unit, reported a 7.1 percent increase in second-quarter profit, to $391 million.

GM's results exclude earnings from the company's Delphi Automotive Systems Corp. unit, which was spun off in May. After a charge in the year-ago quarter of $44 million, or 7 cents a share, to cut jobs at a plant in Belgium, income from continuing operations was $306 million, or 40 cents a share.

Including discontinued operations from Delphi and the year-ago charge, net income rose to $1.92 billion, or $2.94 a share, from $389 million, or 52 cents. Delphi, the world's largest maker of parts, said yesterday that earnings more than tripled to $394 million.

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