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DID GENERAL MOTORS REACH EARNING EXPECTATIONS?

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DID GENERAL MOTORS REACH EARNING EXPECTATIONS?

April 24 2015, 07.55am GMT

STOCK.com

Operating performance did not meet analysts’ expectations on Thursday as GM reported $945 million net profit for the 1st quarter.

On Thursday, General Motors Co. (NYSE: GM) reported a net profit of $945 million; however, operating performance failed to meet analysts’ expectations as the stronger U.S. dollar (USD), coupled with high taxes and South America weakness, took its toll on earnings.

GM’s earnings report caps 3 months that during this period saw Mary Barra, Chief Executive of General Motors, sparring with activist investors while closing most of GM’s Russian operation.

In the 1st quarter, GM earned 56 cents a share, up from 6 cents a share a year ago for the same quarter. Adjusted to exclude charges, the company said that it earned 86 cents a share, lower than the expected 97 cents a share based on a poll by Thomson Reuters analysts.

Net profits were impacted by nearly half a billion dollars due to charges relating to its Russian business during the quarter. The company saw a further loss in net profit of $150 million relating to charges for the ignition-switch-safety-program compensation paid to victims, bringing the program’s total cost to $550 million.

Revenue decreased 4.5% over the same period a year earlier to $35.7 billion. The company said that currency negatively impacted on the revenue by $1.8 billion; more specifically in Russia, South America and Europe.

In March this year, General Motors said that it’s looking to start a $5 billion share buyback process throughout 2016, with 19.4 million shares repurchased thus far. With this buyback commitment, a group of investors were persuaded to let go of a push to get GM board representation as well as a $8 billion buyback.

In North America, General Motors continued its margin growth, with demands in the US for SUV’s and profitable trucks leading to GM’s best performance regionally since emerging from bankruptcy. With North American earnings at $2.18 billion during the reported quarter, it also posted an 8.8 percent operating margin. This this sees GM’s core market expand its year-over-year margin for seven straight quarters.

However, losses were posted in both its South American and European operations. On the upside, the company’s International Operations and GM Financial lending arm posted an operating profit.

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