GM stock up $2.95 on earnings for quarter

Without special charges, profit rises 146% over '01

April 17, 2002|By Ted Shelsby | Ted Shelsby,SUN STAFF

General Motors Corp. reported a nearly 4 percent decline in first-quarter earnings yesterday, including one-time charges.

But, excluding the special items, earnings were up 146 percent over last year and exceeded analysts' expectations.

In addition, for the second time this year, the world's largest automaker boosted its estimate of year-end earnings, from $3.50 to $5 a share, before charges.

GM reported a fivefold increase in earnings for its North American operations, which account for more than half its auto business.

The news was well received on Wall Street, where shares of GM, a component of the Dow Jones industrial average, rose $2.95, or 4.8 percent, to close at $64.05.

Net income for the first three months of the year totaled $228 million, or 57 cents a share. This compares with $237 million, or 53 cents a share in the corresponding period last year. The lower per share figure is because of the way GM accounts for its interest in its soon-to-be-sold Hughes Electronics Corp.

Excluding one-time charges of $100 million to finance a work force reduction of 2,400 salaried employees, the unprofitable Hughes unit and $407 million for a restructuring of European operations - GM earned $791 million, equal to $1.39 a share. This compares with $321 million, or 57 cents a share, in the first quarter last year.

Revenue totaled $46.3 billion, up from $42.6 billion in the like part of last year.

"They did better than Wall Street expected," said David Healy, an auto analyst with Burnham Securities Inc. "They did better than I expected."

Including the Hughes operation, which is being sold to EchoStar Communications Corp., Healy said GM earned $1.29 a share during the initial quarter of this year.

"My estimate was $1.10," he said. "They did 19 cents better than I was looking for, even though they took a big write-off for the work-force reduction."

Without the cost of the employee buyout, Healy said that GM would have earned another 17 cents a share in the quarter.

"Strong vehicle sales in North America coupled with cost reduction drove our profit improvements," said G. Richard Wagoner Jr., GM's president and chief executive.

GM North America earned $625 million for the quarter, up from $120 million in the corresponding period last year.

During a conference call with reporters and analysts, chief financial officer John M. Devine said GM benefited from increased sales of high-profit trucks.

North American production increased 11.4 percent in the quarter, with trucks accounting for 56 percent of the mix. During the first quarter of last year, trucks accounted for 52 percent of total production.

GM said it was looking for ways to boost truck production in the United States but declined to say how it might be accomplished.

The European operation posted a loss of $125 million in the quarter, excluding the restructuring charge, compared with a deficit of $86 million in the previous-year period.

GMAC, the automaker's finance arm, reported a 2 percent gain in earnings to $439 million. Devine said this would have been higher if it were not for lower prices at used car auctions where GMAC sells repossessed vehicles.

The strong first quarter enabled the company to boost its earnings estimate for the full year to $5 a share. In January, it was predicting earnings of $3 a share for the year and raised this to $3.50 about 6 weeks ago.

Healy said he thinks GM's estimate is conservative. "I'm still working the number," he said. "But I see them coming in at $6 or $7."

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.