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GM Hit with 40% Drop in Profit in Q2

Company said the decrease was due 'almost entirely to the strengthening of the U.S. dollar versus other major currencies.'

As sales took a hit from a stronger dollar and Europe's financial woes weighed, General Motors (IW 1000/13), reported a 40% drop in second-quarter profit.

GM reported net income of $1.5 billion in the April-June period, compared with the year-ago profit of $2.5 billion.

Net revenue also declined substantially, to $37.6 billion from $39.4 billion a year earlier.

"The decrease was due almost entirely to the strengthening of the U.S. dollar versus other major currencies," the company said.

Earnings per share beat market expectations of 74 cents, but revenue missed the $38.58 billion estimate.

CEO Dan Akerson noted that despite a challenging environment, GM had now posted 10 consecutive quarters of profitability, following its government bailout amid the 2008-2009 financial crisis.

"But we clearly have more work to do to offset the headwinds we face, especially in regions like Europe and South America," Akerson said.

GM increased global vehicle deliveries by 100,000, to 4.2 million in the second quarter, as its share of the key -- and growing – U.S. market fell to 17.7% from 19.6% a year ago.

North America remained the group's most profitable region, with income of $2 billion, down 9% from the 2011 second quarter.

GM Europe was the heaviest drag on financial results, under pressure from the eurozone sovereign debt crisis. The division had a $400 million loss compared with $100 million profit in 2011.

The South American business was at break-even, after a $100 million profit a year ago.

GM Financial was the only unit to show growth, doubling profit to $200 million.

Copyright Agence France-Presse, 2012 

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