General Motors Beats Estimates for First-Quarter Profit, Boosts Guidance for Year

DETROIT April 20, 2004; The AP reported that General Motors Corp.'s profit of $1.3 billion roared past Wall Street's estimate for the first quarter and the world's largest automaker boosted its forecast for the current quarter and the full year, sending its shares higher Tuesday.

GM cited strong results at its financing arm and its automaking business in Asia in the January-March period, but said automotive operations in North America and Europe continued to be hurt by intense pricing pressure.

Overall automaking profits rose 12 percent for the period, despite a decline in earnings from North America and a wider loss in Europe.

Looking ahead, GM said it expects to earn roughly $2 to $2.25 a share in the current quarter, excluding special items. Wall Street had been expecting earnings of $1.88 a share.

The company also raised its forecast for the full year to about $7 a share, up from its January projection of $6 to $6.50 a share. Analysts had been looking for $6.30 a share for 2004.

"As we look at the outlook for the year, we continue to be very optimistic in each of the four regions we have," said GM chief financial officer John Devine.

GM shares climbed $1.62, or 3.5 percent, to close at $47.77 on the New York Stock Exchange.

GM said its earnings for the January-March period amounted to $2.25 a share, down from $1.5 billion, or $2.71 a share, a year ago.

But the year-ago results included a gain of $505 million, or 90 cents a share, from the sale of GM Defense. Excluding the gain from GM Defense, GM earned $1 billion, or $1.84 a share, in the year-ago period.

The latest results contained no special charges and easily topped the consensus Wall Street forecast of $1.79 a share.

Revenue rose to $47.8 billion in the quarter from $47.1 billion a year earlier.

"Our financial results in the first quarter reflect continued progress," said GM chairman and chief executive Rick Wagoner. "But we still have more work to do to improve our profitability as we face a challenging competitive environment, continuing high health care costs and the effects of the artificially weakened Japanese yen."

Goldman Sachs analyst Gary Lapidus said GM did not rely primarily on the mortgage business at the GMAC financing arm to drive first-quarter earnings -- as it has in past quarters. Instead, Lapidus said, GM posted "outstanding results" in China and "solid results" in North America.

"The only wrinkle appears to be Europe, which fell short of plan," Lapidus said.

Worldwide, GM's automotive operations reported earnings rose to $611 million from $546 million last year despite lower production levels in North America and Europe.

The increase was driven by improved results in the company's Latin America/Africa/Middle East and Asia Pacific regions.

In North America, GM's earnings fell to $451 million from $548 million a year ago, principally reflecting the extremely competitive pricing environment, lower production and high health care costs.

Nonetheless, GM's North American market share rose to 26.4 percent in the first quarter, from 26.1 percent a year ago.

Wagoner attributed the gain in part to the launch of several new models, including the Chevrolet Malibu, Pontiac GTO and Cadillac CTS-V. The rollout continues later this year with the introduction of vehicles such as the Hummer H2 SUT, Cadillac STS and next-generation Chevy Corvette.

GM Europe's loss for the quarter widened to $116 million from a loss of $65 million last year. GM's market share in Europe fell to 9.5 percent from 9.6 percent in the first quarter of 2003.

GM Asia Pacific earned $275 million, up from $75 million a year ago. The Latin America/Africa/Middle East division posted a $1 million profit after losing $12 million a year ago.

In Asia Pacific, GM's market share grew from 4.3 percent last year to 4.7 percent in the first quarter, led by gains in China and India.

GMAC had another record quarter, reporting a profit of $786 million, up from $699 million a year ago, as increased profitability in the financing and insurance operations offset moderating earnings on the mortgage business side.

General Motors Corp.: http://www.gm.com/