GM makes $2.5 billion in 2nd quarter, beating estimates
General Motors made $2.5 billion in the second quarter, beating analysts’ expectations by getting more for its vehicles, for its sixth straight quarterly profit.
The 48% improvement over 2010, including a long-awaited profit from GM’s troubled European unit, breezed past the $2 billion estimate of 16 analysts surveyed by Thomson One Analytics. It comes after weeks of gloomy economic news, including worries about unemployment, consumer spending, European countries’ debt crises and a narrowly-avoided U.S. default.
“It’s a solid quarter; it’s on plan ... profitable in every region of the world -- that’s an important first for us here," CFO Dan Ammann told reporters this morning. Earnings per share of $1.54 beat analysts’ predictions of $1.20 per share.
Still, economic turmoil has pushed GM’s stock down 17.7% from its initial price of $33 in November, as the U.S. Treasury looks for a good time to sell more of its 26% stake. The shares hit their lowest intraday point yet Wednesday -- $26.13. But they rebounded to close at $27.17, up about half a percent.
The government seeks a relatively quick exit, after cutting its GM stake in half during the initial public offering, and is waiting for the market’s reaction to second-quarter earnings before deciding whether to sell shares in the next couple of months. But the Treasury is expected to wait until it can sell its remaining stock at least above the IPO price. To break even on its $49.5-billion investment in GM, it must sell the rest of its shares at about $53 each, although the Obama administration has signaled it’s willing to take some loss.
The poor economy hasn’t stopped GM from booking profits. After $82 billion in losses in the four years before its bankruptcy, GM turned a $4.7-billion net income last year and is in midst of its longest string of profits since an eight-quarter stretch from 2002 to 2004, thanks in large part to the company’s restructuring.