General Motors’ profit rises 89 per cent at $2.5 billion
05 Aug 2011
General Motors sold more higher priced vehicles worldwide to make more money and in the process posted a second-quarter profit of $2.5 billion, which was up 89 per cent on the year ago quarter. Earnings per share were $1.54, as against 85 cents beating analysts' forecasts of about $1.20 per share.
Last week Ford Motor Company grossed $2.4 billion in the current quarter, beating Wall Street expectations, with th ebulk of the profits coming from North America, where the company grossed $1.9 billion before taxes. (See: Ford second quarter earnings down to $2.4 billion)
Revenue surged 19 per cent to $39.4 billion, and unit sales of 2.3 million were up 7 per cent.
According to analysts, GM sales overtook industry sales growth in the second quarter (11.2 per cent vs 6.5 per cent), indicating the underlying strength of GM's product lineup. They added lower incentives spending per unit made up for the slight decline in average transaction prices.
The quarterly profit came as GM's sixth in a row and, notably, the company made profits across its global regions - even in Europe, where it was trying to restructure its troubled Opel unit.
However, the report did not prevent shares in the company from falling $1.18, or 4.3 per cent, to close at $25.99, as the overall market fell around the same on concerns about the economy.
Around a fourth of the company is still held by the US government as a result of the 2009 bailout and had said it would wait until at least this month to begin unloading the stake. However, it would need a share price of over $50 to break even on the $49.5 billion bailout.
GM chief financial officer Dan Ammann, speaking to reporters Thursday, said, "It's a solid quarter … profitable in every region of the world - that's an important first for us."
