GM Posts 2Q Loss of $3.2 Billion; Auto Operations Profitable for First Time Since 2004
26 July 2006
|GM 2Q earnings, 2005 vs 2006. Click to enlarge.|
General Motors Corp. today reported a net loss of $3.2 billion for the second quarter of 2006, compared to a loss of $987 million for the year-ago quarter. The net loss reflected a loss of $4.3 billion in charges for restructuring and attrition.
Excluding the special items, GM posted 2006 second-quarter adjusted net income of $1.2 billion on record revenue of $54.4 billion. This reflects a $1.4 billion improvement from the year-ago adjusted loss of $231 million.
GM’s global automotive operations earned $362 million on an adjusted basis, excluding special items, representing an improvement of $1.3 billion year-over-year. This is due primarily to improvement in GM North America and continued profitability improvement in other regions.
GM’s global market share in the second quarter was 13.8%, up from the first quarter market share of 13.1%, but down from 15.1 percent last year.
GM North America posted an adjusted net loss of $85 million, excluding special items, in the second quarter of 2006, a $1.1 billion improvement over the prior year period. GM attributed the improvement to reductions in the cost base across a broad range of activities, including improvement in warranty and other quality-related costs and a reduction in ongoing pension expense, due largely to the success of the hourly attrition program.
The attrition program and other cost initiatives have enabled GM to increase its structural cost reduction target in North America. GM expects to realize approximately $6 billion in cost savings in 2006, up from the previously announced $5 billion.
We know we have to develop and build great cars and trucks to grow our business and we’re encouraged by the recent success of our newest vehicles, particularly in the U.S. market. Our new full-size SUVs, the Chevrolet Impala and HHR, and Pontiac G6 have all posted strong sales this quarter. Our newly launched vehicles will account for about 30% of our US retail sales this year and grow to 40% next year.
...the impact of our cost-reduction efforts on the bottom line will accelerate in the second half. This, combined with building sales momentum from our new cars and trucks and improved marketing, should enable us to continue to improve year-over-year results significantly.—Rick Wagoner, GM CEO
GM Europe posted adjusted earnings, excluding special items, of $124 million for the quarter, an improvement of $94 million compared with earnings of $30 million in the second quarter of 2005.
GM Asia Pacific posted earnings of $167 million in the second quarter, down slightly from last year’s earnings of $183 million. The difference is more than accounted for by the loss of equity income from Suzuki following the reduction in GM’s equity stake. Market share in the region increased to 6.7% in the second quarter of 2006, up from 6.2% during the second quarter of 2005, driven by strong sales in China.
GM Latin America, Africa and Middle East posted adjusted earnings, excluding special items, of $156 million, a significant increase of $131 million compared with last year’s second quarter results of $25 million.
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