Loss in Europe Fuels 41% Drop in GM Profit

General Motors Co. netted $1.5 billion (€1.2 billion) in the second quarter of this year compared to $2.5 billion (€2.1 billion) in the same period of 2011.

Revenue declined 4% to $37.6 billion (€30.6 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 (€732 million) year over year to $2.1 billion (€1.7 billion).

GM earnings were eroded by a $361 million (€294 million) second-quarter operating loss in Europe compared with a $102 million (€83 million) profit a year earlier. Revenue in the region plunged 21% to $5.9 billion (€4.8 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 (€1.6 billion) in the latest quarter. Revenue dipped 1% to $22.9 billion (€18.6 billion). Sales grew 5% to 820,000 vehicles.

GM's South America unit swung to a $19 million (€15 million) loss from a $57 million (€46 million) profit a year earlier, mainly because of Brazil's weak market. Revenue declined 4% as sales dropped 7% to 254,000 vehicles.

Earnings for the company's international unit, which includes Asia Pacific, slipped 3% to $577 million (€469 million). Revenue jumped 8%, and sales climbed 11% to 863,000 vehicles, aided by gains in China.

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 (€502 million) compared with $747 million (€608 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.