General Motors Corp on Tuesday said it flipped to a quarterly net profit, trouncing Wall Street estimates as it benefited from cost-cutting, a better mix of products and growing sales overseas.
GM, whose shares rose about 6 percent in early electronic trading following the results, posted a net profit of $891 million, or $1.56 a share, compared with a net loss of $3.4 billion, or $5.98 a share a year earlier.
Excluding such one-time items as charges related to Delphi's bankruptcy, the company earned $2.48 a share.
Analysts, on average, had been expecting adjusted earnings of $1.08 a share, according to Reuters Estimates. Forecasts on that basis had ranged from 50 cents to $1.64 per share.
Revenue from auto operations rose to $45.9 billion from $44.8 billion a year earlier.
Total revenue fell to $46.8 billion from $53.9 billion, including results from the GMAC financing arm, which was taken over last year by a group led by private equity firm Cerberus Capital Management. GM realized net income of $139 million from the 49-percent share it still holds in GMAC.
It's true that our North America team has made huge improvements, and we appreciate everyone's hard work, Chief Executive Rick Wagoner said in a statement. But our current earnings clearly demonstrate we've got more to do.
GM, which had lost more than $12 billion in the past two years, is in the middle of a sweeping restructuring that includes slashing more than 34,000 jobs and closing 12 plants in North America.
GM's North American automotive net losses narrowed sharply to $39 million from $3.95 billion a year earlier, when the automaker took charges for its attrition plan.
GM also benefited from strong growth overseas -- where sales accounted for 58 percent of sales in the second quarter.
On an adjusted basis, the largest U.S. automaker reported income from continuing operations in North America of $78 million, compared with a loss of $39 million a year earlier.
Much of that was really a function of cost, Chief Financial Officer Fritz Henderson told reporters shortly after the company announced results.
Henderson said GM needed to keep up the pressure on cost-cutting efforts, including cutting its $4.8 billion annual health care bill.
All three Detroit automakers -- GM, Ford Motor and DaimlerChrysler AG's soon-to-be private Chrysler Group -- have begun talks with the United Auto Workers union to replace a contract that expires September 14. The companies are seeking major concessions, particularly in health care, to cut their operating costs.
Some analysts have warned that stronger quarterly results could complicate those talks.
Ford, which reported results last week, also surprised Wall Street analysts with its first profit in two years as it cut costs and also benefited from strong overseas sales.
GM took charges of $374 million for costs associated with helping supplier Delphi Corp. (DPHIQ.PK: Quote, Profile, Research) restructure in bankruptcy.
The automaker had estimated its total exposure to helping Delphi emerge from bankruptcy with lower labor costs at $7 billion.
(Reporting by Jui Chakravorty)