GM says '14 profit may be ahead of plan, sees Europe in the black by mid-decade

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WARREN, Mich. (Reuters) -- General Motors said today its 2014 profit could be stronger than it expected and painted a more rosy picture in Europe, on the same day it said "incompetence and neglect" at the company failed to catch a defective ignition switch linked to at least 13 deaths.

GM said it was running on or ahead of pace for its previously disclosed plan to report modestly better 2014 adjusted earnings before interest and taxes. Last year, GM's operating profit was $8.6 billion.

However, that forecast excludes the cost of recalls, which so far this year totals $1.7 billion and could rise slightly, CEO Mary Barra said on a conference call.

The company released an internal report today about how it mishandled recalling cars affected by the defective part and said as a result it has parted ways with 15 employees.

GM also said it now expected to report a profit in Europe by mid-decade. Previously, the company had only said it would break even financially in Europe in that time frame.

Barra said GM was targeting market share in Europe of 8 percent and operating margin of 5 percent by 2022. Last year, GM's market share in the region was 5.8 percent and it has not shown a profit there in more than a decade.

Overall, GM said operating earnings in the second half will be stronger than the first half.

However, the company's outlook excludes the impact of the recalls it has announced this year. Barra said there could be additional charges in the second quarter above the $400 million announced so far, but Chief Financial Officer Chuck Stevens said that additional amount would not be material and the company has not changed any capital or product development plans as a result.

GM said the recalls have had "no meaningful impact" on sales in North America.

Stevens said by the end of the second quarter the company expects to set the cost of the victim compensation fund it announced on Thursday that it would establish for those injured or who lost loved ones due to the defective ignition switch. He said those costs would be treated as a one-time charge against earnings and adjusted as needed.

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