General Motors Corp. yesterday reported stronger quarterly profits of $1.48 billion, but warned that it may not meet its earnings target for the full year due to uncertain global economic conditions.
Detroit-based GM, the world's largest automaker, said its earnings rose to $2.71 per share, up from $228 million or 57 cents per share in the year-ago quarter. Results were boosted by a one-time gain of $505 million from the sale of its defence unit and stronger results from its automotive operations.
Last year, GM took several one-time charges totalling $417 million, most resulting from job cuts and write-downs at its European automotive operations.
Despite the gains, GM warned that its full year target of $5 per share, excluding results from its Hughes Electronics Corp. unit, was now uncertain. GM's US market share fell during the first quarter, and margins have been hit by escalating incentive costs. Earnings have also been hurt by increasing costs for its massive US pension, which ended 2002 underfunded by $19.3 billion.
Analysts' forecasts for GM's 2003 earnings range between $3.49 and $6.19 per share, with a mean estimate of $4.63 per share, according to research firm Thomson First Call.
The automaker, which over the past two years has staged a strong comeback and consistently beat Wall Street earnings estimates, said it would not provide an new target for its 2003 earnings.
Excluding the one-time gain, GM earned $978 million or $1.81 per share in the first quarter. That result was on the high side of Wall Street forecasts for earnings per share between $1 and $1.85, with an average forecast of $1.54, according to Thomson First Call.
In January, GM said it expected first-quarter earnings of $1.45 per share, including a loss of 5 cents per share from its Hughes Electronics Corp. unit.
GM's automotive operations earned $546 million in the first quarter, down from $496 million last year. However, earnings from its core North American automotive operations fell to $548 million in the first quarter from $654 million a year earlier after Detroit's price war, higher pension costs and currency exchange losses offset cost cuts.
GM said it expected second quarter earnings, excluding Hughes and special items, of "at least" $1.00 per share, at the low end of Wall Street forecasts. Analysts' forecasts, including Hughes, range between $1 and $2.36 per share, with a mean estimate of $1.37 per share, according to First Call.
Ford Motor Co. is expected to return to profitability as cost cuts from its ongoing restructuring offset lower car and truck sales.