GM profit slumps on weakness in Europe
GM profit slumps on weakness in Europe

A big loss in Europe has dragged down General Motors' second-quarter profit.

The company's net income from April to the end of June fell 41 per cent to $US1.5 billion ($A1.44 billion), $1 billion less than the same quarter a year earlier, GM said.

A $361 million loss in Europe, coupled with $19 million in losses in South America, pulled down strong performances in North America and Asia.

In last year's second quarter, GM made $102 million in Europe before taxes.

European nations are struggling to contain a debt crisis, weak economies and high unemployment, which have hurt car buying in the region.

Even North America, GM's profit centre, showed weakness. Pre-tax profit fell almost 13 per cent to about $2 billion.

International operations, which include China, saw pre-tax earnings fall three per cent to a $557 million.

Overall revenue slipped five per cent to $37.6 billion.

The company's overall profit was better than Wall Street expected.

GM earned 90 cents per share, compared with 75 cents forecast by analysts. Shares rose 31 cents, or 1.6 per cent, to $19.97 in pre-market trading on Thursday.

Chief financial officer Dan Ammann wouldn't predict when GM would make money again in Europe, saying it was largely dependent on the broader regional economy.

"We don't know exactly how that's going to unfold," he said.

GM is restructuring in Europe and has an array of new vehicles coming out this year and next around the globe. Ammann said that is reason for optimism.

Still, the company predicted that its third and fourth quarter pre-tax profits would be comparable to the first quarter, when it made $1.69 billion.

GM's European sales, which include mainly the Opel and Vauxhall brands, fell seven per cent to 454,000 vehicles during the quarter as several countries went into recession and government debt problems scared away buyers.

But Ammann said GM was able to keep its prices relatively steady as people paid more for new models, offsetting discounts on older models.

Earlier this month GM replaced its European chief executive and added three outsiders to its management team there, including two from Volkswagen, the region's top automaker.

The West Australian

Popular videos

Compare & Save

Our Picks

Compare & Save

Follow Us

More from The West