General Motors Corp. captured a smaller share of the global vehicle market in the second quarter of the year but made more money than during the same period of 2003, the company said yesterday.
The world's biggest automaker benefited from record earnings by its finance business and from more efficient automobile production, leading to better overall earnings than expected.
GM reported that earnings rose 49 percent, to $1.34 billion ($2.36 per share) on sales of $49.1 billion for the quarter, up from net income of $901 million ($1.58) on sales of $45.9 billion for the same portion of 2003.
"Overall, our financial results for the quarter were reasonably good," chairman and chief executive G. Richard Wagoner Jr. said in a news release. "But competition in the global automotive market remains very intense, and we still have much work to do to improve our automotive profitability to targeted levels."
Like rival Ford Motor Co., which on Monday reported quarterly net income of $1.17 billion, GM relied heavily on its financial services arm for its profits. General Motors Acceptance Corp. posted record earnings of $860 million for the quarter, compared with $834 million a year ago.
Much of that increase came from loans on vehicles; GMAC's mortgage business declined slightly for the quarter.
The company's global automobile business nearly quadrupled its profits, earning $529 million for the quarter compared with $140 million a year ago. That jump came in spite of the fact that GM's share of the global market for vehicle sales slipped to 14.7 percent from 14.9 percent in the second quarter last year.
In North America, GM declined to 26.2 percent of the market from 27.2 percent a year ago, but the company's profit was way up -- to $328 million from $83 million in second-quarter 2003. The leap in profit resulted from "excellent cost performance," Prudential Equity Group LLC analyst Michael Bruynesteyn said yesterday in a bulletin to investors.
GM also saw healthy earnings in Asia and Latin America. But while rival Ford showed big profit gains in Europe, GM's European operations sagged, reporting a loss of $45 million for the quarter compared with a loss of $3 million in the same quarter last year. The company blamed the widening loss on unfavorable currency exchange rates, price competition and restructuring costs for a powertrain joint venture with Fiat SpA.
Nonetheless, GM's European market share was up slightly for the quarter, to 9.8 percent from last year's 9.4 percent.
The disappointing profit performance in Europe "means we have to pick up the pace in new-model introductions while we simultaneously reduce costs," Wagoner said in the news release. "That's a tough assignment, and it's going to require [GM Europe] to do a better job of leveraging our global resources to bring new products to market faster and at lower cost."
The company's cash position was where it should be, Bruynesteyn said, with $25 billion in cash and pension assets, up from $23.5 billion at the end of the first quarter. The company said that excluding special items, it remains on track to earn between 75 cents and $1 per share for the third quarter, and about $7 per share for the year, as previously projected.