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GM Profit Drops 41% on Losses in Europe
General Motors Co. netted $1.5 billion in the second quarter of this year compared to $2.5 billion in the same period of 2011.
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General Motors Co. netted $1.5 billion in the second quarter of this year compared to $2.5 billion in the same period of 2011.
Revenue declined 4% to $37.6 billion in the April-June period, chiefly because of the stronger dollar. Worldwide sales rose 3% to 2.39 million vehicles. Earnings before interest and taxes slid $900 million year over year to $2.1 billion.
GM earnings were eroded by a $361 million second-quarter operating loss in Europe compared with a $102 million profit a year earlier. Revenue in the region plunged 21% to $5.9 billion, and vehicle sales fell 7% to 454,000 units.
Operating results also deteriorated at the company's auto units in other regions. North American income dropped 13% to $2 billion in the latest quarter. Revenue dipped 1% to $22.9 billion. Sales grew 5% to 820,000 vehicles.
GM's South America unit swung to a $19 million loss from a $57 million profit a year earlier, mainly because of Brazil's weak market. Revenue declined 4% to $4.2 billion as sales dropped 7% to 254,000 vehicles.
Earnings at the company's international unit, which includes Asia Pacific, slipped 3% to $577 million, including a $106 million charge for India operations. Revenue jumped 8% to $6.9 billion. Sales climbed 11% to 863,000 vehicles, aided by gains in China.
GM Financial boosted operating income 51% to $217 million.
The automaker generated $1.7 billion in automotive free cash flow, up 42% from the second quarter of 2011.
In the current quarter, GM forecasts operating income of about $1.4 billion in North America.
CEO Dan Akerson won't predict when European operations will return to profitability. But he expects the unit to continue to struggle in the July-December period. In the first half of this year, GM Europe lost $617 million compared with $747 million for all of 2011.
Vice Chairman Stephen Girsky, who is interim chief of GME operations, says the company didn't move fast enough to "fix the things we can control." GM ousted Opel CEO Karl-Friedrich Stracke in mid-July.
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