GM profit falls on North America weakness

General Motors Thursday reported a 13.8 percent drop in first-quarter profit largely due to weakness in North America, but pared losses in recession-riddled Europe. GM, the largest US automaker, reported net income of $865 million in the quarter to March 31, down from $1.0 billion a year earlier. The company earned 67 cents per share, excluding special items, solidly topping analysts' average estimate of 54 cents. The company reported a net loss of nine cents per share from special items, including a charge for the devaluation of the Venezuelan bolivar and pension settlements. Net revenue fell 2.3 percent to $36.9 billion, reflecting a broad decline in sales worldwide that nevertheless was not as steep a Wall Street expected. GM shares were up 3.2 percent at $31.16 in closing trade on the New York Stock Exchange. Pre-tax earnings in North America came in at $1.4 billion, down 13.9 percent from a year ago. GM spokesman Jim Cain said the North America results were expected to improve after the company completes several roll-outs of new vehicles in the region. "The story for North America is we're transitioning our product portfolio," Cain said. That shift comes against "a backdrop of an economy that continues to improve." The company's pre-tax losses in Europe were $175 million, 40 percent lower than a year ago. "The year is off to a solid start as we increased our global share with strong new products that are attracting customers around the world," Dan Akerson, GM chairman and chief executive, said in a statement, adding: "We saw progress in Europe thanks to strong cost actions. GM chief financial officer Daniel Ammann said in a conference call that the company was in "aggressive cost-control mode in Europe." The region "is a very tough market environment. Ultimately we don't totally control the topline, but we do control what is going on cost-wise and we are staying aggressive on it," Ammann said. RBC Capital Markets characterized the Europe numbers as "much better" than expected and predicted the troubled unit could reach "break-even" status by mid-decade. Ammann declined to comment on the financial implications of the shutting of its Bochum, Germany-based factory. GM has announced plans to close the factory by end-2014 after workers rejected a compromise package. The site, owned by GM unit Opel, employs more than 3,000 people. GM's South America division swung into a loss of $38 million compared to a gain of $153 million a year ago. Ammann attributed the weak result in South America to Venezuela, which has historically been a profitable country for GM. GM saw "very little" production in Venezuela "due to geopolitical obstacles," Ammann said. On the positive side, Ammann pointed to a pickup in business in Brazil, saying GM expected to "build on last year's progress for the region for the year." GM said its worldwide market share rose from 11.2 percent in the year-ago period to 11.4 percent in the most recent quarter. US market share grew from 17.2 percent to 17.7 percent. GM's wholesale vehicle sales, the figures that are used to calculate profits, showed declines in most regions compared with last year. GM North America sold 829,000 wholesale compared with 848,000 in the year-ago period. An exception was China, where wholesale deliveries from GM's joint ventures grew to 841,000 from 756,000.