GM Sales Hit the Brakes, Posts $3.3B Loss
Strikes and dropping sales of gas guzzlers causes $3.3B first quarter loss.
DETROIT April 30, 2008— -- General Motors Corp. struggled to a $3.3 billion first-quarter loss, due in part to a weak U.S. market, a strike at a major supplier and plummeting sales of sport utility vehicles and pickups.
The loss reported Wednesday for the January-March period, which amounted to $5.74 per share, also reflected one-time charges. It compares with a profit of $62 million, or 11 cents per share, in the first quarter of 2007.
GM said a two-month strike at American Axle and Manufacturing Holdings Inc. has cost it $800 million and 100,000 vehicles. The strike has affected 30 GM plants.
GM's loss included a $1.45 billion charge to reflect a change in the value of GM's interest in GMAC Financial Services and $731 million to increase GM's liability in Delphi Corp.'s ongoing bankruptcy.
Excluding the one-time items, GM lost $350 million, or 62 cents per share, beating Wall Street's expectations. Analysts surveyed by Thomson Financial had expected a loss of $1.60 per share.
Ray Young, GM's executive vice president and chief financial officer, said analysts may be underestimating GM's overseas growth. He also said GM is making progress in cutting costs in North America.
"The North American turnaround is occurring," he said.
GM's total revenue for the quarter was $42.7 billion, down from $43.4 billion a year ago. GM said revenues were up 20 percent outside North America thanks to strong growth in China, Russia, Brazil and India, but were impacted by the slowdown in North America and losses at GMAC.
GM lost $276 million in the first quarter due to its minority stake in GMAC. GM lost $812 million in North America, compared with a loss of $208 million in the year-ago quarter.
"We continue to leverage our global product portfolio to take advantage of tremendous growth in key emerging markets, while at the same time taking the appropriate actions to deal with the challenging economic conditions in the U.S.," GM Chairman and Chief Executive Officer Rick Wagoner said in a statement.
