GM Profit Plunges after Recall Costs

GM Profit Plunges after Recall Costs

NEW YORK -- General Motors (IW 500/5), the largest U.S. automaker, on Thursday reported first-quarter profits plunged 85% after a series of vehicle recalls.

GM posted net profit of $125 million, dragged down by a $1.3 billion charge for recalling seven million vehicles worldwide.

The Detroit, Michigan-based company also took a $300 million charge for restructuring costs, mostly in Europe, and had costs related to the exchange rate it uses for Venezuela's currency.

Net revenue in the first quarter was $37.4 billion, up from $36.9 billion in the first quarter of 2013.

Earnings per share were six cents, down from 58 cents a year ago but beating Wall Street estimates of four cents.

"The performance of our core operations was very strong this quarter, reflecting the positive response of customers to the new vehicles we are bringing to market," said GM chief executive Mary Barra.

"Our focus remains on creating the world's best vehicles with the highest levels of safety, quality and customer service, while aggressively addressing our business opportunities and challenges globally," said Barra, who became CEO in January.

GM faces a slew of investigations and lawsuits over its delayed recall of vehicles for an ignition switch problem that has been linked to 13 deaths and other injuries.

The ignition problem was detected at the pre-production stage as early as 2001, but the company waited until February this year to begin recalling the affected vehicles.

Copyright Agence France-Presse, 2014

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