GM posts another decent profit
General Motors Co. made $865 million during the first quarter — its first quarterly profit in almost three years — in a show of progress made possible by a rebound in sales and the company's bankruptcy filing, which helped GM shed billions in liabilities and lower its break-even point.
Operating income was $1.2 billion from January through March, during which time GM posted revenue of $31.5 billion, a 40 percent increase. GM also generated $1 billion in free cash flow during the quarter.
The $1.66 per-share profit compared to a $6 billion net loss a year earlier, or $9.78 per share, as GM teetered on the brink of bankruptcy.
The rebound was most noticeable in GM's North American operations, which posted a $1.2 billion profit during the first-quarter, compared to a $3.4 billion loss in the fourth quarter of 2009.
GM's international operations also had a $1.2 billion profit, up $500 million from the previous quarter. But GM's European operations recorded a $500 million loss.
This afternoon, GM Vice Chairman and Chief Financial Officer Chris Liddell will discuss the results with financial analysts and reporters.
"We're pleased with our first quarter performance, in particular achieving profitability," Liddell said in a prepared statement issued this morning.
"In North America, we are adding production to keep up with strong demand for new products in our four brands. We're also steadily growing in emerging markets, keeping our costs under control, generating positive cash flow and maintaining a strong balance sheet. These are all important steps as we lay the foundation for a successful GM."
GM should be able to sustain profitability the rest of this year, said analyst Erich Merkle of Autoconomy.com in Grand Rapids.
"Provided there is no second leg in the recession and auto sales continue to expand," he said. "I don't see any reason why they can't maintain profits for the full year."
GM's last quarterly profit came in the second quarter of 2007, when the automaker earned $891 million.
GM recorded first-quarter adjusted earnings before interest and tax of $1.7 billion, which included a $123 million gain from the sale of castoff brand Saab.
The results show GM is getting closer to selling shares of the company to the public. GM has said it wants a string of profitability before launching an initial public offering, which could happen later this year, or in early 2011.
GM's financial position has improved to the point that the automaker already returned unused government loans to repay the government $6.7 billion. But taxpayers are still on the hook for $43 billion in aid that was swapped for a 61 percent majority stake in GM.
GM lost $4.3 billion last year in the months after it emerged from bankruptcy, but the bulk of the red ink was the result of one-time charges. Detroit News