GM Profit Falls 90 Percent From Year-Ago

Unsold 2007 Acadia crossover vehicles sit at a GMC Truck dealership in the south Denver suburb of Littleton, Colo., on Sunday, April 22, 2007. (David Zalubowski - AP)

"Without substantial labor concessions, meaningful improvements in profitability are unlikely in our view," he said in a note to investors.

Henderson said the company is on track to reduce annual costs by $9 billion this year. By the end of last year, it had achieved an annual cost reduction of $6.8 billion largely through the departure of thousands of hourly workers due to buyout or early retirement offers.

But Henderson conceded that more must be done as it heads into national contract negotiations in June with the United Auto Workers union.

"When we look at the results in North America, it's good to see improvement. It's not good to be operating at a small loss, clearly, given where we are in our product cycle," he said. "Frankly, our business is not generating the kind of returns that we expect, and clearly we have to continue to make significant improvements."

GM also reported $32 million of special items largely due to restructuring in its Europe and Asia Pacific divisions. Its results a year ago were also inflated by a one-time after-tax gain of $395 million due to the sale of its equity ownership of Suzuki Motors.

Excluding special items, GM's net income was $94 million, or 17 cents per share, compared with net income of $350 million, or 62 cents per share in the first quarter of 2006. Those results fell short of Wall Street expectations.

Fifteen analysts polled by Thomson Financial predicted earnings of 87 cents per share, excluding special items.

GM's revenue fell to $43.9 billion for the quarter, down 16 percent from $52.4 billion in the same period a year ago. GM said the decline was almost entirely due to GMAC revenue no longer being included in GM's consolidated results.

Automotive revenue for the quarter was $42.9 billion, down from $43.6 billion a year ago.

But while automotive revenue slipped, the number of cars and trucks GM sold globally rose 3 percent.

Henderson said the average transaction price per vehicle in North America rose by about $1,000 year over year, but GM also had production cuts of 192,000 units for the first quarter as it tried to reduce low-profit fleet sales and incentives.

"Clearly being down 192,000 units is a big headwind," Henderson said.

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