GM returns to profit after bankruptcy woes
US auto giant General Motors reported a post-bankruptcy quarterly profit for the first time in three years on the back of a jump in sales and cost cutting measures.autos Updated: May 18, 2010 22:40 IST
US auto giant General Motors reported on Monday a post-bankruptcy quarterly profit for the first time in three years on the back of a jump in sales and cost cutting measures.
Net income for the first quarter 2010 reached 865 million dollars compared with a massive loss of 5.98 billion dollars during the same period in 2009.
The earnings attributable to stockholders during the January-March period came on the back of a 40 percent jump in sales and revenue to 31.5 billion dollars from 22.4 billion dollars in the 2009 corresponding period.
As GM erased the red ink on its balance sheet, a weekend news report said it was eyeing an initial public offering, which would enable the government to begin selling its stake in the company.
"The IPO will happen when the market is ready and when the company is ready," Chris Liddell, GM vice chairman and chief financial officer, told a conference call with stock analysts and journalists.
"It could have happened by the end of this year, that's a possibility, it could be next year, that's a possibility as well," he said, following a Wall Street Journal report that the Treasury Department was interviewing bankers to advise the government on an IPO.
The Treasury Department still owns 61 percent of GM, which received 50 billion dollars of government financing for its bankruptcy restructuring that led to mass layoffs, plant closures and billions of dollars in debt wiped out.
GM said last month it was able to pay off 8.4 billion dollars in government loans ahead of schedule after reporting a post-bankruptcy 2009 loss of 4.3 billion dollars.
"We're pleased with our first-quarter performance, in particular achieving profitability," Liddell said. "Posting a profit and positive cash flow are important steps as we work to rebuild General Motors."
In North America, GM was adding production to keep up with strong demand for new products in its four brands - Chevrolet, Buick, Cadillac and GMC.
GM North America earned 1.2 billion dollars before interest and taxes in the first quarter after suffering most of its losses in that region in recent years.
In the last quarter of 2009, GM lost 3.4 billion dollars in North America.
GM Europe had a loss of 500 million dollars, an improvement of 300 million dollars from the fourth quarter.
Overall, GM's international operations posted earnings of 1.2 billion dollars, up 500 million dollars from the previous quarter.
Liddell said that GM was also steadily growing in emerging markets, keeping costs under control, generating positive cash flow and maintaining a strong balance sheet.
"These are all important steps as we lay the foundation for a successful GM," Liddell said.
The latest financial results marks the US automaker's first quarterly profit since it made 891 million dollars in the second quarter of 2007.
GM as well as its US competitors Ford and Chrysler were hard hit by the recession which struck the United States in December 2007, caused by a home mortgage meltdown.
Ford posted a 2.1-billion-dollar profit in the first quarter of 2010, as global sales swelled, while Chrysler narrowed its loss to 197 million dollars in the same period.
Of the so-called Detroit Three automakers, Ford was the only one to avoid bankruptcy, managing to stay afloat thanks to massive loans it had obtained prior to the credit crunch and because it moved more quickly to revitalize its product portfolio.
All three firms reported surging year-on-year sales figures in April, building a gradual upward turn for the industry after a difficult 12 months.