GM's second-quarter earnings drop on restructuring charges
The US auto maker beat analysts forecast but car sales were mostly weaker and it took big charges for restructuring international operations and after the seizure of its Venezuelan plant
US auto maker General Motors Company (GM) said on Tuesday that second-quarter earnings were down sharply, mainly because of costs associated with ceasing operations in various countries, including Venezuela where the socialist government seized the company's assets in spring.
The company said that net earnings attributable to shareholders was down 42 per cent in the three months to the end of June, at US$1.66 billion versus $2.87bn in the same three-month period last year.
The company reported that overall worldwide car sales were down 2 per cent at just over 2.3 million vehicles in the quarter, and down 1.7 per cent year-to-date at just under 4.7m vehicles.
The strongest sales were reported in GM's South America segment, up 18 per cent at 160,450, but the company emphasised growth in China, where volume sales were 1.6 per cent higher at just over 850,000. The US market was down 3.4 per cent by volume, at around 880,000.
GM's earnings when adjusted for the discontinued operations and charges for restructured international operations were $1.89 a share, up 5.6 per cent from the year-earlier quarter and above the average of analysts' forecast of $1.68. GM's shares were down 1 cent at $35.82 in early New York trading.
In May, GM said it would restructure certain parts of its non-American operations, including focusing on India to be more of an exporting business and completion of the sale of its Chevrolet and Opal car-making plants in Port Elizabeth, South Africa to Japan's Isuzu Motors, which already had taken over GM's East Africa operations.
Another jolt came earlier in the year when the Venezuelan government seized GM’s subsidiary - General Motors Venezolana - which had been in the country since the 1950s and employed nearly 2,700 workers. The plant had been consistently loss-making, but the "de-consolidation" cost GM $80m in the quarter.
The costs of restructuring internationally - apart from Venezuela - were $460m, the company said in its earnings statement.
"We will continue transforming GM to captialise on growth opportunities," said Mary Barra, the company's chief executive.
GM's chief financial officer , speaking on a conference call soon after the results, said the company was pleased with the numbers overall for this year.
"We're very pleased with first-half results which puts us on track to deliver the full-year results we guided earlier this year," said Chuck Stevens. He said earnings in North America was about $3.5bn, with China contributing another $500m and earnings above $400m for the company's financial unit, which mainly provides car loans and credit card services.
Also, he added, "we broke even in South America in a very, very challenging market."
Updated: July 25, 2017 06:32 PM