Total revenue at GM actually ticked up for the quarter by about 1 percent to $37.41 billion. However, the huge outlay on recalls and another roughly $400 million loss due to special items were partially responsible for net income dropping to $125 million, an 86-percent decrease from Q1 2013, according to Automotive News Europe. GM's North American operations also saw pre-tax earnings fall to $600 million, compared to $1.4 billion in this period last year.
"Our focus remains on creating the world's best vehicles with the highest levels of safety, quality and customer service, while aggressively addressing our business opportunities and challenges globally," said GM CEO Mary Barra in the report.
GM has been wracked by faulty vehicles in the past three months. The well-publicized ignition switch recall was rolled out in three waves as the company found more and more potentially affected cars, and it eventually covered roughly 2.6 million cars. While this grabbed many headlines, GM also had to repair about 1.3 million autos for faulty power steering systems and around 2.19 million for bad ignition cylinders that could let the key come out. There were also several smaller fixes affecting even more of its products. Automotive News Europe predicts that the business had seven million cars that needed replacement parts in this quarter. In response, the company created a new position for a safety watchdog.
GM didn't make any forecasts for the next quarter in the report. However, it will be interesting to see how company fares in Q2. Scroll down to read the release.
Net income reduced by recall charge and special items
EBIT-adjusted of $0.5 billion, reduced by $1.3 billion pre-tax recall charge and $0.3 billion in restructuring costs
Company records strong core operating performance in first quarter
Revenue and free cash flow improved year-over-year
DETROIT – General Motors Co. (NYSE: GM) today announced first quarter net income attributable to common stockholders of $0.1 billion, or $0.06 per diluted share. Strong core operating performance during the quarter was more than offset by a net loss from special items of $0.4 billion, or $(0.23) per diluted share, and a $1.3 billion pre-tax charge primarily for the cost of recall-related repairs, or $(0.48) per diluted share.
Special items in the quarter were primarily related to changing the exchange rate GM uses for re-measuring the net assets of its Venezuelan subsidiaries.
In the first quarter of 2013, GM's net income attributable to common stockholders was $0.9 billion, or $0.58 per diluted share, including a net loss from special items of $0.2 billion or $(0.09) per diluted share.
Earnings before interest and tax (EBIT) adjusted was $0.5 billion and included the impact of a $1.3 billion pre-tax charge for recall-related costs and $0.3 billion in restructuring costs. This compares to the first quarter of 2013, when the company recorded EBIT-adjusted of $1.8 billion, which included a pre-tax charge of $0.1 billion for recalls and $0.1 billion in restructuring costs.
Net revenue in the first quarter of 2014 was $37.4 billion, compared to $36.9 billion in the first quarter of 2013.
"The performance of our core operations was very strong this quarter, reflecting the positive response of customers to the new vehicles we are bringing to market," said GM CEO Mary Barra. " Our focus remains on creating the world's best vehicles with the highest levels of safety, quality and customer service, while aggressively addressing our business opportunities and challenges globally."
GM Results Overview (in billions except for per share amounts)
Q1 2014 Q1 2013
Net income attributable to common stockholders
Earnings per share (EPS) diluted
Impact of special items on EPS diluted
Automotive net cash flow from operating activities
Adjusted automotive free cash flow
GM North America reported EBIT-adjusted of $0.6 billion which included the impact of a $1.3 billion pre-tax charge for recall costs in the quarter. This compared with EBIT-adjusted of $1.4 billion in the first quarter of 2013.
GM Europe reported EBIT-adjusted of $(0.3) billion, which includes $0.2 billion for restructuring costs. This compares with EBIT-adjusted of $(0.2) billion in the first quarter of 2013.
GM International Operations reported EBIT-adjusted of $0.3 billion, compared with EBIT-adjusted of $0.5 billion in the first quarter of 2013.
GM South America reported EBIT-adjusted of $(0.2) billion, compared with EBIT-adjusted of $0.0 billion in the first quarter of 2013.
GM Financial earnings before tax was $0.2 billion for the quarter, compared with $0.2 billion in the first quarter of 2013.
Cash Flow and Liquidity
First quarter automotive cash flow from operating activities of $2.0 billion and automotive free cash flow of $0.2 billion were both significantly improved compared with the first quarter of 2013. GM ended the quarter with very strong total automotive liquidity of $37.4 billion. Automotive cash and marketable securities was $27.0 billion compared with $27.9 billion at year-end 2013.
"Our revenue and cash flow improved this quarter and our underlying business performance remains on plan," said Chuck Stevens, GM executive vice president and CFO. "Executing flawless launches and using our strength in the U.S. and China to restructure key global operations will continue to be our focus this year."
General Motors Co. (NYSE:GM, TSX: GMM) and its partners produce vehicles in 30 countries, and the company has leadership positions in the world's largest and fastest-growing automotive markets. GM, its subsidiaries and joint venture entities sell vehicles under the Chevrolet, Cadillac, Baojun, Buick, GMC, Holden, Jiefang, Opel, Vauxhall and Wuling brands. More information on the company and its subsidiaries, including OnStar, a global leader in vehicle safety, security and information services, can be found at http://www.gm.com.
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