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GM profit falls 14 pct in 1Q; Europe loss narrows

Published: Thursday, May 2, 2013 2:45 p.m. CDT

DETROIT– General Motors' net income fell 14 percent in the first quarter, as it earned less money in North America while preparing to launch a redesigned version of its best-selling vehicle, the Silverado pickup.

GM earned $865 million, or 58 cents per share, down from $1 billion, or 60 cents per share, in the January-March period a year ago. But excluding one-time items, GM's earnings of 67 cents per share topped analysts' forecast for 54 cents, according to FactSet.

Revenue also topped Wall Street's expectations, and the company lost less money in Europe than a year ago.

GM's shares rose 5 percent to $31.68 in morning trading. At one point, they hit $31.75, the highest level since July 2011. They're up 8 percent since the beginning of this year.

Worldwide sales rose 3.6 percent to more than 2.3 million. GM had record sales in China, its biggest market. And the automaker boosted its share of the North American market as sales in the U.S. rose 9 percent.

GM's earnings in North America fell 12.5 percent from a year ago to $1.4 billion. Chief Financial Officer Dan Ammann said GM shipped fewer pickup trucks ahead of the launch of its newly redesigned Chevrolet Silverado and GMC Sierra full-size pickups. Those go on sale in a few weeks. Auto companies book profits on a vehicle when it leaves the factory.

GM's report echoed Chrysler Group's earlier this week. Chrysler also reduced vehicle shipments ahead of the launch of the new Jeep Cherokee, and its earnings tumbled 65 percent to $166 billion.

GM sold a record 816,373 vehicles in China, up 10 percent from the first quarter a year ago. Among the hot sellers was the Cadillac XTS full-size sedan, which went on sale in China in February. Chinese buyers snapped up more than 2,000 XTS sedans in March alone, despite their steep starting price of $56,000.

Profits in GM's international operations, which includes China, fell 5 percent to $495 million. Ammann said gains in China were offset by weakness in other regions, including India.

The XTS and smaller ATS also gave GM a boost in the U.S., where GM sold 664,964 cars and trucks in the quarter and outpaced the industry's gain of 6 percent. U.S. Cadillac sales jumped 38 percent while Buick sales were up 27.5 percent thanks to the new Verano small car and Encore small utility.

Sales of the Silverado rose 22 percent in the U.S., boosted by an increase in home building and other construction.

In Europe, where the government debt crisis and high unemployment have led to 18 straight months of declining industry sales, GM's loss narrowed to $175 million from $294 million a year ago. Ammann said GM is not yet ready to say that the European auto industry has hit bottom, but the company is proceeding with its plan to invest in new products and close a German plant by 2014.

"There are things we can control and we're making good progress on those," he said.

GM's European results were better than rival Ford Motor Co., which is also restructuring its European operations. Ford's European losses more than tripled to $462 million in the first quarter. But Ford earned a record $2.4 billion in North America, or $1 billion more than GM. Ford last month reported net income of $1.6 billion for the first quarter.

GM's revenue fell 2.3 percent to $36.9 billion in the first quarter. One-time items included a charge for currency devaluation in Venezuela.

Detroit-based GM is still 16-percent owned by the U.S. government, a legacy of the U.S. Treasury's bailout of GM in 2009. So far, the government has recovered around $30.4 billion of its $49.5 billion bailout, and plans to sell its remaining share. But those shares would have to sell for around $79 each — more than double GM's current stock price — for taxpayers to break even.

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