General Motors says second-quarter profit fell 85 per cent as recall costs chopped $1.5 billion from the bottom line.
It is no surprise that these numbers have fluctuated over time, especially with all the recalls and restructuring that have plagued GM in the previous months. So far this year GM has recalled almost 30 million vehicles, a company record. Without one-time items GM would have made 58 cents per share, equaling Wall Streets expectations.
General Motors has reported a plunge in their 2014 second quarter net income attributable to common stockholders of $0.2 billion, or $0.11 per diluted share. In the previous year, GM posted $1.2 billion, or $0.75 per share.
Strong core operating performance during the quarter was offset by a pre-tax net loss from special items of $1.3 billion, or $(0.47) per diluted share, and costs of $1.2 billion pre-tax primarily for recall-related repairs, or $(0.44) per diluted share.
Our underlying business performance in the first half of the year was strong as we grew our revenue on improved pricing and solid new vehicle launches, said GM CEO Mary Barra. We remain focused on keeping our customers at the center of all we do, and executing our plan to operate profitably in every region of the world.
Earnings before interest and tax (EBIT) adjusted was $1.4 billion and included the impact of $1.2 billion in recall-related costs and $0.2 billion in restructuring costs. This compares to the second quarter of 2013, when the company recorded EBIT-adjusted of $2.3 billion, which included a charge of $0.2 billion for recalls and $0.1 billion in restructuring costs.
Net revenue in the second quarter of 2014 was $39.6 billion, compared to $39.1 billion in the second quarter of 2013. In the first six months of 2014, revenue rose to $77 billion, up from $76 billion in the same period a year ago.
GM North America reported EBIT-adjusted of $1.4 billion which included the impact of $1.0 billion in recall-related costs in the quarter. This is down significantly from the previous year.
GM Europe reported an EBIT-adjusted of $(0.3) billion, which includes $0.2 billion for restructuring costs.
GM International Operations reported EBIT-adjusted of $0.3 billion.
GM South America reported EBIT-adjusted of $(0.1) billion, which remained the same as the previous year.
GM Financial earnings before tax was $0.3 billion for the quarter, similarly, the company posted $0.3 billion in the second quarter of 2013.
“With successful new vehicle launches, we continue to generate strong results in the U.S. and China and remain on track to be profitable in Europe by mid-decade,” said Chuck Stevens, GM executive vice president and chief financial officer. “We are confident we are currently on or ahead of plan to deliver the results we promised earlier this year, excluding the effects of recalls.”
GM took a number of pretax charges tied to the recalls. They include $400 million to compensate victims of ignition-switch related crashes; $874 million to account for recall expenses during the next 10 years; and $1.2 billion for recalls announced during the quarter. The after-tax impact of those items was $1.5 billion.
SOURCE General Motors
