GM Profit Looks Good in the U.S. but Slows in China
The good news just doesn't seem to want to stop for the American auto makers. General Motors (NYSE: GM) reported profits that beat analyst's estimates thanks to very strong global sales.
The company, which had a fantastic 2011, said that first-quarter profits, while slipping slightly to 93 cents from 95 cents the previous year, crushed the estimates of 85 cents per share. The company has reason to celebrate then, despite net income falling to $1.3 billion from $3.37 billion, or $1.77 per share, this time last year.
CFO Dan Ammann said in a statement that, "We are aggressively eliminating complexity to reduce our costs."
The company might well be reducing complexity, but they aren't reducing vehicles, as it prepares to launch, "more than 20 major vehicle launches around the world in 2012 to drive revenue this year and farther into the future.”
The trend had already been set by Ford (NYSE: F), which had reported a fall of 45% to $1.4 billion. With losses in Europe, slowing growth in China and increasing competition in South America have a big impact, both GM and Ford are relying on domestic sales more and more.
But the news is still good. Revenue went up to $37.8 billion from $36.2 billion, which killed an average analyst estimate of $37.5 billion. Not only that, but this quarterly profit is the company's ninth in succession. Not bad for a business that needed a government bailout just a few short years ago.
Meanwhile, GM's adjusted operating profit moved up to $1.6 billion from $1.25 billion the previous year. The downside is that international revenue fell significantly to $529 million from $586 million. That, despite global vehicle sales rising 4% to 2.3 million units from 2.22 million in 2011.
And the numbers keep rolling in. 1Q domestic sales rose 2.7% to $608,320, thanks in no small part to the Chevrolet Cruze and Malibu sedans.
Adjusted operating loss in Europe totaled $256 million, after the company made a $5 million profit last year.
CEO Dan Akerson said last week that, "We're in dialogue with all of the constituencies and it's multinational, given our footprint in Europe. We hope within the next couple of months to be able to speak more specifically about the details of a plan going forward.”
That's a lot of numbers thrown out, but the key detail is that GM is still doing better than most analysts are predicting, and there is every chance that 2012 will be another big year for the company.
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