CleanMPG Forums - GM’s First Quarter: Revenues up 4.3%, Sales up 4.1% and Its Net down Significantly

Still profitable but the European financial crisis is having an effect on the bottom line.

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Wayne Gerdes - CleanMPG - May 3, 2012

GM earlier today released its first quarter financials and while still profitable, its European manufacturing facilities contractual obligations and the Continents financial woes weighed heavily on the automotive giants results.

Net revenue in the first quarter of 2012 was $37.8 billion, an increase of $1.6 billion compared with the first quarter of 2011. Earnings before interest and tax (EBIT) adjusted was $2.2 billion, an increase of $0.2 billion compared with the first quarter of 2011.

One time Charges

Net income of $1.0 billion was down from the $3.2 Billion earned in the first quarter of 2011. The steep falloff can be almost entirely accounted for through a change in special items. In the first quarter of 2011, GM recorded a $1.5 Billion one-time gain from the sale of Delphi Automotive and Ally Financial preferred stock whereas in the first quarter of 2012, the company recorded a one-time loss of $612 Million associated with a change in how it accounts for its factories in Europe making them far less valuable.

Excluding the one-time charges, GM earned 93 cents per share for the first quarter soundly beating the streets forecast of 85 cents on revenue of $37.9 billion.

Dan Akerson, GM Chairman and CEO said in a prepared statement the following:

Quote:

“The U.S. economic recovery, record demand for GM vehicles in China and the global growth of the Chevrolet brand helped deliver solid earnings for General Motors. New products are starting to make a difference in South America, but Europe remains a work in progress. We’ll continue to work on both revenue and cost opportunities until we have brought GM to competitive levels of profitability.”

Segment Results

GM North America (GMNA) reported EBIT-adjusted of $1.7 billion, including restructuring costs of $0.1 billion, an improvement of $0.4 billion compared with the first quarter of 2011.
GM Europe (GME) reported an EBIT-adjusted loss of $256 million compared with a slight gain of $5 million in the first quarter of 2011.
GM International Operations (GMIO) reported EBIT-adjusted of $0.5 billion compared with $0.6 billion in the first quarter of 2011.
GM South America’s (GMSA) EBIT-adjusted of $0.1 billion was flat compared with the first quarter of 2011.
GM Financial earnings before tax was $0.2 billion for the quarter, a $0.1 billion increase from the prior year.

2012 GM North American Outlook

Thanks to the strengthening U.S. economy, GM now expects that full-year 2012 U.S. light vehicle or Seasonally Adjusted Annual Rate (SAAR) will be in the 14.0 million – 14.5 million range. From its previous estimates of 13.5 million – 14.0 million units earlier.

Based on the company’s current outlook, GMNA’s results for the second and third quarters of 2012 are expected to be comparable to the first quarter of 2012 due to the scheduled downtime at factories that produce full-size trucks.

Cautionary Note

While GM was profitable in the fast recovering North American marketplace, its competitors sales volumes in the first quarter have increased at a far more robust rate with many showing double digit gains. GM experienced a 2.7% increase in unit volumes resulting in a market share of 16.7%, a significant amount less than the 18.3% share it commanded in the first quarter of 2011. European market share was down .2% to 8.2%, Asia was up .1% to 9.4% and South America was down .4% to 18.4%.