GM posts 2Q loss

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GM posts 2Q loss

Embattled automaker falls well short of forecasts of narrow profit; program boosts market share.

July 20, 2005: 9:53 AM EDT

NEW YORK (CNN/Money) - Embattled automaker General Motors Corp. posted another loss Wednesday, giving it results far worse than Wall Street forecasts despite strong sales in the period.

The world's No. 1 automaker lost $318 million, or 56 cents a share, in the second quarter, excluding special items, compared with earnings of $1.4 billion, or $2.42 a share, a year earlier.

Analysts surveyed by earnings tracker First Call had expected earnings to fall to a 3 cents a share profit in the period.


Including special items the company's net loss was $286 million, or 51 cents a share.

The loss followed a first quarter loss of 839 million, or $1.48 a share, excluding items, in the first quarter. The company has not given any guidance of when it will return to profitability.

Shares of GM (Research), a component of the Dow Jones industrial average, opened trading Wednesday down $1.48, or 4 percent, at $35.35.

Selling more cars for less money

The company said it increased global market share to 15.2 percent from 14.7 percent a year earlier, as a program to offer U.S. buyers the discount pricing normally given to GM employees resulted in increased June sales but proved costly.

The number of vehicles sold in the quarter rose to 2.6 million from 2.4 million a year earlier. Some of those sales came out of inventories, as the number of vehicles built in the quarter actually fell to 2.3 million from 2.4 million a year. The drop in production was one of the key factors leading to the loss, Chief Financial Officer John Devine told investors.

But even with the rise in units sold, revenue from auto sales fell by just over $1 billion to $40.2 billion. Still that beat First Call's revenue forecast of $38.9 billion. Total revenue at the company fell to $48.5 billion from $49.3 billion as revenue from its finance arm, GMAC, improved.

The company's core North American auto operations lost $1.2 billion, compared with earnings of $355 million in the second quarter a year ago. The company saw its European auto operations return to profitability for the first time in five years. Profits improved in other GM regions as well.

Chairman and CEO Rick Wagoner said the company was pleased by sales performance, but conceded that the company's announced efforts to trim costs, especially health care expenses for employees and retirees, fell short.

"We are not yet making the progress we need on the cost side of the business," he said.