DETROIT, Michigan, July 21 (AFP) - General Motors Corp. reported robust second-quarter results Wednesday chiefly due to the strength of the Chinese auto market and its financial services division.
The world's biggest automobile maker said that earnings came in slightly ahead of expectation, but stuck with its previous, conservative full-year earnings guidance.
The results reflect the tough sales environment in the global vehicle market. On Monday, the Ford Motor Co. reported that strong second-quarter earnings of 1.17 billion dollars, but only because record earnings at its financing arm offset money-losing automotive operations.
For the quarter ended June 30, the automaker raked in 1.34 billion dollars in net profit, up almost 50 percent from the same period a year ago on sales that were ahead just seven percent.
Earnings per share climbed to 2.36 dollars from 1.58 dollars a year before, slightly ahead of the 2.24 dollars consensus expectation of industry analysts polled by First Call.
"Overall, our financial results for the quarter were reasonably good," said GM chairman and chief executive Rick Wagoner.
But while financing arm General Motors Acceptance Corp (GMAC) did well, many areas of the automotive business were disappointing, he said.
"General Motors Acceptance Corp. once again had an outstanding quarter, setting another record," Wagoner said in a statement.
"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."
GMAC, boosted by gains in its insurance business, earned a record 860 million dollars in the latest quarter, up 3.1 percent from a year earlier.
The results from GM's core automotive operations were mixed, with gains in Asia Pacific offsetting mediocre results in North America and Europe.
Asia Pacific accounted for almost half of the group's 529 million dollars in net income and 18 percent of GM's total net income. On a year-over-year basis, the division's net income also grew 45 percent.
On a related note, GM chief financial officer John Devine said the company continues to be bullish on China in spite of a recent cooling in the sales pace there.
"I expect volume growth to continue, but there will be some margin pressure," he told reporters in a conference call.
GM North America grew its earnings to 328 million dollars in the second quarter of 2004, compared with earnings of 83 million a year ago, but most of that came from material cost savings.
The automaker has also given up one point of its hard-earned US market share since this time last year, slipping to 26.2 percent, GM executives acknowledged.
"While earnings at GM North America improved, overall sales, market share and financial results were well below our expectations. For sure, the competition is tough, but we also must move faster to implement our strategy," Wagoner said.
Europe continued to be a drag on earnings, losing 45 million dollars, compared to a loss of three million dollars a year before.
Some of that was due to pricing pressure, but foreign-exchange losses and continuing restructuring costs for GM's share of the GM-Fiat powertrain joint venture also took a chunk out of earnings.
For the full-year 2004, GM reiterated an earnings guidance target of seven dollars per share.