GM Beats Analyst Targets Despite Europe's Financial WoesVW Staff
General Motors Company (NYSE:GM) reported a 41% decline in profits amidst European woes that have impacted on various global companies adversely. However, this was no bad news at all, as the reported earnings per share of 90 cents beat analysts’ projections of 74 cents per share.
GM’s sales were down 5% to stand at $37.6 billion from last year’s Q2 sales of 39.4 billion, despite a slight increase in the number of vehicles sold globally. This decline was attributed to the strengthening of the dollar, which has surged against major currencies as compared to a year ago.
Interestingly, North America experienced a 13% decline in operating profit, despite a majority of the sales taking place in the form of U.S dollars. The company reported a profit of $1.97 billion, as compared to last years $2.25 billion, notes U.K’s the Guardian.
Nonetheless, this was close to nothing in terms of the impact on the overall earnings, as compared to sales reported from Europe. The global auto maker reported an operating loss of $361 million, as compared to last year’s operating profits of $102 million.
CNN Money notes that the decline in sales from Europe was subject to the rise in the rates of unemployment, and was compounded by widespread recession in the region, which originates from the European debt crises.
The Chief Executive Officer of the company, Dan Akerson, expressed to analysts that GM is in talks with German unions, regarding a new, comprehensive deal that is set to address the quandary of productivity, costs and the company’s excess capacity, notes the report.
The two parties are on course, to wrap the deal this fall, as Akerson is quoted saying, “In the past, we haven’t moved fast enough to fix the things [in Europe] we can control,” he said. “But that has changed.”
Financial reports from other countries globally, with the exclusion of, the Americas and Europe, reported a slight decline in profits of 3%, as compared to last year’s figures, while the South American based unit posted a narrow loss.
It appears that General Motors Company (NYSE:GM) is not the only auto company lamenting Euro Zone crises. Another U.S company with a global presence, Ford Motor Co. (NYSE:F), reported a 47% decline in profits from the crises struck Europe. Additionally, yesterday we reported that Ford saw volume sales drop 3.8% to stand at 173,966 during the month of July, despite the strong optimism surrounding the auto motive sales industry.
Elsewhere, Bayerische Motoren Werke AG (ETR:BMW) Q2 recorded a rise in sales and revenue for the Q2 results, but the high costs exhibited during the second quarter as compared to the benefits realized last year, led to a 28% decline in profits, a report on NASDAQ revealed.
Nonetheless, the operating profit recorded was the company’s second best in its entire history. Chairman of the Board of Management of the company, Norbert Reithofer is quoted saying, “the BMW Group continued to perform extremely well, both on a second-quarter and half-yearly basis. We have achieved new sales volume and revenue high as well as the second best operating profit in the company’s history.”
At the time of this writing, GM stock was down $0.68 or 3.46% decline to trade at approximately $19 per share.