Because of the cost of the recall of the 2.6 million cars equipped with the defective ignition switch, General Motors posted a profit decrease of 88% from the first quarter of 2013.
Besides that, the company also said expectations for the full year outlook need to be toned down, which triggered a 1.3% shares slide after the announcement. Still, the company managed to top analysts expectations thanks to pricing gains from the pick-up trucks sold in North America.
“We’ve changed the shape of the curve,” said Chief Financial Officer Chuck Stevens. “We performed better than we expected in the first quarter, so we’ll have to trim some of the expectations Q2 through Q4.”
In January, GM said it expects its earnings to be a little higher in 2014 than last year and left them unchanged during the Q1 earnings announcement. The firs quarter charges include the already announced $1.3 billion cost of the recall and for the full year GM expects a $1.1 billion charge in restructuring spending.
In the first quarter, the US company’s net income fell from $873 million in Q1 2013 to just $108 million, or 6 cents a share. Revenue for the same period went up by 1.4% to $37.4 billion, with the operating profit boosted by $1.8 billion.