The largest US automaker and the third biggest in the world failed to surpass analyst expectations, announcing weaker than expected first quarter financial results, battered by slowdown in Russia and South America.
Chief Financial Officer Chuck Stevens did reaffirm the firm’s full-year goal to post an improved profit and mainly remained on track to reach its prospective 10 percent earnings margin in North America and return to positive results in Europe next year. “Clearly the macro environment in South America, and it’s primarily Brazil, deteriorated versus even where we thought it was going to be,” commented the executive the regional weaknesses. The company reported that net income for the January to March period jumped to $945 million, or 56 cents a share, from $125 million, or 6 cents a share, back during the same period of last year. Without one-time items the earnings were of 86 cents a share, while analysts predicted 97 cents.
Revenue on the other hand was reduced by 4.5 percent to $35.7 billion, less than $37.6 billion of analyst estimates. The earnings wind down was attributable in part to a higher than expected tax rate, which cost the company about 4 to 5 cents and to the South American weakness – another 6 cents. Sales were impacted by the slump in Brazil and Russia – where GM is almost entirely pulling out – as well as headwinds from currency swings triggered by the stronger dollar. North American profit margins reached 8.8 percent and the company earned $2.18 billion thanks to lower overall costs, as well as rising demand for SUVs, crossovers and pickup trucks.