Jump to content
  • Greetings Guest!

    CheersandGears.com was founded in 2001 and is one of the oldest continuously operating automotive forums out there.  Come see why we have users who visit nearly every day for the past 16+ years. Signup is fast and free, or you can opt for a premium subscription to view the site ad-free.

Sign in to follow this  

Black ink is fashionable again at General Motors

Recommended Posts

Black ink is fashionable again at General Motors



Black ink is back at General Motors.

Everybody say hallelujah.

We were not sure we'd be able to speak those words again, after $88 billion in losses since 2005, a bankruptcy and another $50 billion in taxpayer support to prop up the invalid that was once the world's mightiest industrial company.

So go ahead, say them. Savor them.

Black ink is back. GM is profitable once more.

Plenty of worries remain about the future -- more on that later -- but let's revel for now in GM's numbers for the first three months of 2010:

• A net profit of $865 million. That's a $4.4-billion turnaround from the final quarter of 2009 and nearly $7 billion better than the $6 billion quarterly loss of a year ago.

• A $1.2-billion operating profit, before interest and taxes, from selling cars and trucks in North America. GM made more money at home than in the red-hot markets of Asia, more than offsetting a $506-million loss in Europe. Overall GM pretax profits were $1 billion higher than those predicted Friday in a J.P. Morgan Chase report.

• The trading value of old GM bond debt nudged upward Monday in reaction to the better-than-expected results. This is an indicator of what new GM stock will be worth when the company goes public again so the U.S. Treasury can begin divesting its 61% ownership stake.

Chris Liddell, GM's chief financial officer, pronounced it "an extremely good first quarter" and then -- appropriately so -- stopped short of predicting bigger future profits or a quick initial public offering (IPO) of stock.

Indeed, there are several reasons for concern about whether GM can sustain and grow profits.

GM's total share of car and truck sales in Europe and North America has been slipping. That's due chiefly to the elimination of Pontiac, Saturn, Hummer and Saab.

Sales of the four remaining core brands have gained ground in the U.S. It's important now that overall market share hold steady or climb.

Upcoming launches of new Buick Regal and Chevrolet Cruze models are key. Europe is expected to remain unprofitable this year. Liddell said he hopes GM operations can break even there in 2011.

Chapter 11 bankruptcy allowed GM to shed a mountain of debt. That windfall won't happen again.

Perhaps the most telling number in Monday's report is that "interest expense" dropped 72%, or $893 million, since 2009's first quarter. That gain alone is more than the entire GM first-quarter 2010 profit.

So let's give thanks for GM's much lower cost structure as we applaud the black ink, knowing that, if it continues to flow, pressures will build from labor and other quarters to share the wealth.

Figuring out how will be a good problem to have. Just make sure the taxpayers get paid back first.



Share this post

Link to post
Share on other sites

Your content will need to be approved by a moderator

You are commenting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

About us

CheersandGears.com - Founded 2001

We ♥ Cars

Get in touch

Follow us

Recent tweets



Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.