GM reports first quarter loss due to strike

Source: Exec Digital USA

Date :30/04/2008 05:19:53

General Motors Corp. today posted a first quarter loss due to a supplier strike, waning vehicle demand and a quarterly loss at GMAC.

This is the third consecutive quarterly loss for the Detroit based automaker who, like the rest of the US automotive industry, is suffering from weakened demand.

There has also been a shift away from profitable pick-ups and SUVs.

GMAC

GM has also taken a hit from its remaining investment in finance company GMAC, in which they hold a 49 percent stake. Weighed down by a $1.45 billion charge in GMAC, the company posted a net loss of $3.25 billion, or $5.74 per share, compared with a profit of $62 million, or 11 cents a share a year earlier.

GMAC posted a loss of $589 million compared with a loss of $305 million a year ago, reflecting losses in the financing company’s mortgage business.

Chief Executive Alvaro de Molina explained that continuing volatility in the capital and credit markets had put pressure on the quarterly results.

“While the actions we have taken to date to reduce risk, reduce leverage and streamline the cost structure have produced results, there is still more to do,” he said Wednesday.

Underestimating

The loss was narrower than Wall Street predicted, analysts suggesting they may have underestimated the progress the company made cutting costs in North America.

"The headline numbers don't look that great, but when you actually peel back the numbers ... I feel the first quarter is very encouraging," GM Chief Financial Officer Ray Young told reporters.

April 30, 2008