GM posts Q1 profit, on the road for an IPO

The top U.S. automaker, General Motors Inc., today published earnings for the first quarter of 2010.

The company said revenue in the quarter was $31.48-billion, up materially from $22.4-billion (an increase of 40.54-percent) in the same period last year.

GM had an operating profit of $1.2-billion in the period, and earned $865-million in net earnings in the period. Net earnings compare to a $5.98-billion loss YoY.

The current increase in net earnings is attributable to many factors, primarily the increase in demand for GM vehicles, and lower fixed costs as production rose. Additionally, the company said it transferred retiree health expenses to an independent less costly trust.

The company declined to give any outlook on possible future expected earnings in the remaining quarters of this fiscal year, but said it is hopeful for a full year profit.

The company’s new chief financial officer, Chris Liddell, who took the top finance job last January, said today that, “the next step is to achieve sustainable profitability,”

The profit in the first quarter of 2010 puts the company on the right path towards an initial public offering (IPO), something GM confirmed it would like to do likely this year.

GM has taken unprecedented steps in the last year to cut costs largely by slowing down production, releasing employees, and by selling key assets, including the iconic Hummer brand to the Chinese automaker Sichuan Tengzhong, and the Saturn brand to Penske for $200-million.

The company also has plans to begin to offer more direct financing to consumers, similar to its former financing arm GMAC. GM sold its 51-percent controlling GMAC stake in 2006.

GMAC most recently posted its first quarterly profit since late 2008, reporting a $162-million net profit in the first quarter of 2010.

GM says offering more direct financing could be more appealing for investors when the company issues equity via an expected IPO this year.


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Peggy holds a Bachelor Arts degree with honors in Economics from York University in Toronto, Canada. She is a Certified Management Accountant (CMA). She has also passed Level I of the Chartered Financial Analyst (CFA) Program. She is also a realtor. Write to peggy@business2press.com
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