GM: Turnaround Continues With $891 Million Profit
July 31, 2007

General Motors this morning posted a better-than-forecasted second-quarter profit of $891 million, compared with a $3.4 billion loss in the same quarter a year ago.

GM's improved financial performance suggests the automaker's turnaround plan is progressing.

Investors liked the news as GM shares were on the rise in early electronic trading, Reuters reported.

Now, the question is can GM be profitable for a full year after two years of losses?

The second-quarter profit was GM’s third-straight quarterly profit. It was achieved largely through cost-cutting, record automotive revenue thanks to strong sales in growth markets outside of the U.S., sales of a richer mix of models and finance income from General Motors Acceptance Corp.

GM's earnings would have been even higher except that the automaker took some one-time charges, including $374 million related to Delphi Corp.'s bankruptcy

Despite struggling with sales in the U.S., GM's North American automotive net losses narrowed to $39 million from $3.95 billion a year earlier. GM is cutting more than 34,000 jobs and closing a dozen plants.

Revenue from its auto operations rose 2.2 percent to $45.9 billion from $44.8 billion a year earlier.

Total revenue dropped to $46.8 billion from $53.9 billion, because GM no longer owns all of GMAC; it sold 49 percent to Cerberus Capital Management, which is buying Chrysler and Tower Automotive. More importantly, revenue for auto operations rose, to $45.9 billion from $44.8 billion last year.

A full-year profit likely will be achieved only through a favorable contract with the UAW to replace the one that expires in September and an increase in sales and market share in the U.S., where GM is struggling. GM has lost $12 billion over the last two years.

Posted by Michelle Krebs at 4:37 AM under Featured , GM , News | Comments (0) | digg this | Seed Newsvine