GM Disappointed With $1.1 Billion Loss
General Motors reported that consolidated net income for the first quarter of 2005, including special items, was a loss of $1.1 billion, or $1.95 per share.
The special items include charges for restructuring in Europe, U.S. salaried attrition programs, and facility impairments, partially offset by recognition of the recurring tax benefits above those reflected in the fifteen-percent rate used in GM’s adjusted earnings. These items had a net unfavorable effect of $265 million, or $0.47 per share in the first quarter of 2005. There were no special items in the first quarter of 2004.
“While most of our business units exceeded expectations, the results at GM North America (GMNA) were clearly disappointing,” said GM Chairman and Chief Executive Officer Rick Wagoner. “We have well thought-out plans to address GMNA’s poor performance, starting with aggressive product introductions this year, value-focused marketing initiatives, and further reductions in our cost structure, where the greatest need is to address the challenging health-care cost situation.”
GM’s automotive operations reported a loss of $1.3 billion in the first quarter of 2005, compared with earnings of $561 million in the year-ago quarter.
GM North America accounted for this weak performance, reporting a loss of $1.3 billion in the first quarter of 2005, compared with earnings of $401 million a year ago. This deterioration reflects lower sales and production volumes, a tougher pricing environment, an unfavorable sales mix, and a continuing, large health-care burden.
GM’s market share in North America was 25.2 percent in first-quarter of 2005, down from 26.3 percent in the year-ago period.
“While we were encouraged by improved sales in March, we significantly reduced production volumes during the first quarter to balance inventories,” Wagoner said. “These adjustments reduced dealer inventory levels by nearly 100,000 units from the year-ago period, but they also adversely affected our North American financial results.
“We clearly have the need to do a much better job on both the revenue and cost side of our business,” Wagoner added. “Our revenue strategy is clear and has already begun to play out. On the cost side of the business, we continue to make progress in most key activities, but we need to accelerate our efforts on the challenging U.S. health-care situation.”
GM expects total U.S. industry sales in the second quarter of 2005 to come in at a seasonally adjusted annual selling rate of around 17 million, about flat with the selling rate in the first quarter of 2005.
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