DETROIT (AP) — General Motors on Thursday reported its
worst quarterly performance in more than four years as the costs of a
series of recalls dragged down earnings.
First-quarter profit fell
86 percent to $125 million. The Detroit automaker took a $1.3 billion
charge for recalling about 7 million vehicles worldwide. GM also
incurred $300 million in restructuring costs, mostly in Europe. And it
took another $419 million charge due to a change in the way it values
Venezuela’s currency.
GM made 6 cents per share, down from 58
cents per share a year ago. The recall charge alone cut 48 cents off
GM’s first-quarter earnings.
Excluding one-time items, GM made 29 cents per share, far above Wall Street estimates of 3 cents per
share.
It
was a disappointing start to what many expected would be a strong year
for GM. The U.S. government, which bailed out the automaker five years
ago, sold its remaining stake in the company at the end of last year,
freeing GM of the "Government Motors" nickname. In January, the company
announced its first quarterly dividend in six years. And GM has rolled
out multiple new models in recent months including high-profit pickup
trucks and full-size SUVs.
But the recalls overshadowed the first
quarter under the leadership of new CEO Mary Barra, the first woman to
lead a major automaker. In February, GM announced it would recall more
than a million older small cars because the ignition switches can slip
from "run" to "accessory" or "off," shutting down the engine. That
knocks out power steering and brakes and can cause drivers to lose
control and crash. It also disables the air bags. Later, the recall was
expanded to 2.6 million cars, and other recalls took the number to near 7
million.
GM admitted knowing about the problem at least a decade
ago. Thirteen people have died in crashes linked to the problem,
according to GM, although relatives of the victims say the death toll
exceeds 30.
The financial results were GM’s worst since late 2009,
when it posted a $4.4 billion loss for the five months after leaving
bankruptcy protection.
Even so, the company’s revenue for the
quarter was strong. GM took in $37.4 billion, up 1.3 percent from the
year-ago quarter and in line with analysts’ estimates.
GM’s global
sales for the quarter rose 2.3 percent to 2.42 million cars and trucks.
China sales grew 13 percent, and sales in Europe rose less than 1
percent. But sales fell 2 percent in North America, GM’s most profitable
region. Sales fell 10 percent in South America.
The company’s
North America division earned $600 million. Without the recall charge,
it would have earned $1.9 billion, up from $1.4 billion a year ago.
Sales in the region fell to 745,000 cars and trucks.
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