Turnaround intact: GM posts Q2 profit of $891mil
This morning, General Motors announced its second quarter earnings, which saw the giant automaker earn $891 million in Q2 compared to a loss of $3.4 billion last year that had analysts wondering whether the automaker would be around for today's announcement. GM's performance in the second quarter played out largely like it did for cross-town rival Ford, in that the profitable performance of its overseas operations in Europe, Asia and South America outweighed its losses at home. Major cost cutting also helped the bottom line, and CFO Fritz Henderson is quoted as saying the company is going to keep the "pressure" on. He's likely referring to historic talks with the UAW occurring as we speak that GM hopes will result in lower healthcare bills for the automaker.
GM deserves to stop and smell the roses today, however, as its stock price has been surging all morning, being up as much as 6.0% before the opening bell and hitting a high of $34.65. As of this writing, GM stock is at 33.61, up about 1.00 or 3.07%.
[Source: Bloggingstocks, Automotive News]
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Reader Comments (Page 1 of 2)
Avinash machado 12:15PM (7/31/2007)
The return of Detroit seems to be well on track. Wonder what the GM deathwatchers have to say now.
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Ligor 12:23PM (7/31/2007)
It seems GM is really going to come out strong this next few years,
but I am still looking at Ford an Chrystler and wondering what they have that's going to bring them out
I mean the Edge can't do it all alone - new cars are needed in both companies.
Jon 12:57PM (7/31/2007)
@ Ligor--
As much as I'd like to defend Ford, I must say you're right. I'm excited about the G8 in particular from GM, looks like they finally figured out how good the Aussies have it. Too bad Ford hasn't realized that yet, or we would have G8 v. Falcon wars. Lincoln lacks a suitable flagship (and what's up with FWD luxury cars?). And Mercury just isn't special anymore.
As for Chrysler, they have got a lot of work ahead of them now that they're faced with the task of fixing everything that Daimler broke. We have FWD Jeeps, the Ram is losing the American pickup-battle, and the problem with the new trash-mashed Sebring is that it exists.
I won't say that GM doesn't also have problems, but so does every other automaker on the face of the earth. Ford and Chrysler just happen to have more.
Schmeltz 12:39PM (7/31/2007)
Great job GM! Keep up the good work.
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Tyk 12:40PM (7/31/2007)
Someone smart once said that you cant cut your way to profitability. Which is what GM is doing. This is a start, but, they will have to have many more consecutive quarters of profits (esp. in the NA market) before they are in the clear.
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Jeremy 12:59PM (7/31/2007)
So apparently you must have missed that every one of GMs vehicles is being replaced in the next couple of years? AS they have stated themselves, cuts are only a portion of what they have to do, proving their quality is next and that is really starting to happen now! (2007 Motor Trend Truck of the Year, 2007 Car of the year )
TriShield 1:18PM (7/31/2007)
One small quarterly profit doesn't mean much in the big picture. GM is still a declining patient making progress but still in need of surgery, this news is a drip in the IV.
Yes, GM is making some fantastic products now that warrant cross-shopping and that people want to buy. And yes GM still sells hundreds of thousands of vehicles but they simply don't make any money doing it.
GM is burning through billions of dollars in North America to try to keep itself in business, and it's selling the entire farm to do so. Unless GM gets a radical concession from the UAW (which will amost certainly dig in it's heels at this news of "profit") or can drastically restructure it's business they will go bankrupt in time.
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Harry Ariola 3:00PM (7/31/2007)
This is their third consecutive quarterly profit amid rising international sales. If GM didn't make any money selling their product, they wouldn't have made $891 million in Q2. Given the pending product introductions, which will delete most of the weak links from their product-line, GM is headed in the right direction.
The current re-structuring seems to be working. To better differentiate their North American brands while fully utilizing their world platforms, GM could import the entire Holden line as Pontiac; import the full Opel line under the Saturn moniker; produce the Chinese Buick models to meet US standards and sell them here as well; Chevrolet could sell bow tie branded Daewoo products to offer small, lower priced vehicles side by side with models designed solely for the N.A. market; while GMC remains a truck / CUV / SUV brand. The current plan for Cadillac to become an international brand appears to already be in place. Doing so will allow for maximum utilization of all of their platforms, while creating unique market niches for each of its' American marques.
DarkKnight67 1:29PM (7/31/2007)
I'm surprised that the usual doom and gloom patriarchs haven't signed up this morning ... granted, this is only one example of profitability and it can only provide further questions as to whether the UAW will make concessions, but it is the type of start and progress that people needed to see. Keep up the growth and dedication to re-establishing yourselves, GM.
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Beat-it-nerd 2:16PM (7/31/2007)
The difference between GM and Ford is that GM has really filled the pipelines well with new exciting product, with a lot more to come. Granted there are some older unexciting models still in existence, but that is the way the car business works. Ford does not seem to have much in the works, nor have they for some time...
http://www.gmaccessoriesstore.com
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Seminole 2:38PM (7/31/2007)
Congrats GM, keep it up.
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Stratojet 3:18PM (7/31/2007)
Is this sustainable, this is the question.
An article was published recently in the Wall Street Journal about the claim that UAW want the USA to have the same Health system as they have in Japan. Fact is that Japanese citizens get substantially less than any UAW worker. For example, in Japan, they have a limit capped for very serious and chronic ilnesses , which a UAW worker does not have.
In short, the UAW really sqweezed the Big Three and extracted all the blood in good times. This profit in the second quarter in nothing compared to Toyota's and does not assure any jobs in the corporation. It cost more than 1 billion dollars to develop a new product to keep up with the competition.
So, So, Solidarity also means share the pain when times are not so great. It will happen one way or the other, no matter what Ron Gettelfinger says in the media.
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Mr. Oak 3:20PM (7/31/2007)
I wonder what Kirk Kerkorian is thinking about all this good news coming out of the General these days. Guess he thought they would wither and die once he left.
Keep on fighting the good fight. Stronger today than Yesterday, Stronger Tomorrow than Today.
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whofan 3:22PM (7/31/2007)
World wide GM is doing good at home not so good. This profit is global operations not the domestic market.
GM has a long road of recovery ahead.
I`m pro American and hope the three automaker we have left survive. Product from these 3 companies is as good as any other makes.
People here are too quick to call a recovery or death watch. 800 millon dollars is chump change for a corporation as big as GM. GM profits should be in the billions. Buy American.
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Mr. Oak 3:44PM (7/31/2007)
plus 800 million dollars is a long way up from minus 3.4 billion dollars. It shows a positive gain, a move in the right direction.
With new models, the CTS and Malibu about to drop, I for one expect to see an even bigger improvement in earnings.
ADR 3:45PM (7/31/2007)
Again, just like Ford GM did not make money by selling cars in America. If it didn't have its US operations they would have made much greater profits.
That is the big problem. GM is raking in huge profits from Asia and China is on track to purchase more vehicles than North America pretty soon.
If you look at the cards it isn't unthinkable that GM will bankrupt its US operations and only make cars for Eurasia. They won't need the US factories or the UAW to make profit so there's no reason to keep them. The US dealer network would then just import foreign made GM vehicles.
This is what is happening people. In fact it is going to happen and the current UAW talks may be the catalyst that sets the whole thing off. GM and Ford need to make profit to remain viable companies. If that means sacrificing US operations then that is what will be done.
The shame is that a lot of Americans would still buy the cars since that would be the American thing to do even if there is nothing American left in them.
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Mr. Oak 4:03PM (7/31/2007)
Who was it that said: "The Sky is Falling, The Sky is Falling"?
Barney 5:21PM (7/31/2007)
I agree. If the foreign market is making them money and the home operation is losing it, GM would be better to do only off-shore sales. The factories at home are getting too expensive and the locals have lost interest. Ford should follow suite.
whofan 5:59PM (7/31/2007)
If GM altimently pulled its factories out of the US Toyota and Honda would follow suit. At least 40% of Toyotas` products are imported now.
Our standard of living is going to take an hit if we keep bleeding. Health care cost is one major issue thats helping our downward spiral. Buying American makes more sense than not. GM cost structure is based on a 50% market share that they now no longer have.
I agree with you except for this part,
"The shame is that a lot of Americans would still buy the cars since that would be the American thing to do even if there is nothing American left in them".
When that day comes Toyota won`t have to pretend to be American either. GM still will hang its hat here.
Greased up politicians wont go after big oil or fix our health care system.
Jake 4:12PM (7/31/2007)
I guess congratulations are in order for GM.
However, I really don't see the "exciting" products you all are talking about. Other than the Tahoe, and possibly the Acadia, the rest of the lineup remains rather, uninspiring.
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