DETROIT -- General Motors today posted net income of $3.2 billion for the first quarter, its fifth straight quarterly profit since emerging from bankruptcy.
Stripping out one-time charges and gains, including $1.6 billion in income from the March sale of GM's ownership in Delphi Automotive, GM earned $2 billion before interest and taxes. GM's net income for the January-through-March period a year earlier was $865 million.
Revenue grew 15 percent, to $36.2 billion, according to the GM report issued today.
"Our first quarter results can best be described as on plan," GM CEO Dan Akerson said during a conference call with analysts. "We have a lot of work to do to leverage our scale and realize the full potential of our brands."
Strong demand in North America led the way. Earnings in the region more than doubled to $2.9 billion, compared with $1.2 billion during the same quarter last year.
But Morgan Stanley analyst Adam Jonas said GM's profit margin in North America was disappointing. Excluding one-time items, GM's profit in the region of $1.3 billion fell short of his expectation of $1.9 billion.
"North American auto profit was the biggest disappointment of the quarter, offset partially by a break-even [operating] result in Europe" and stronger-than-expected profits in the international division, Jonas wrote.
GM shares fell $1.02, or 3.09 percent, to close at $32.02 in New York Stock Exchange trading today.
GM said it expects North American profits to improve over the rest of the year, thanks to better pricing and cost cuts, which should offset continued increases in commodity costs and a shift from trucks to less-profitable cars.
No major earthquake damage
In a statement, GM reiterated that it "continues to expect no material impact on full-year results from the Japan crisis."
CFO Dan Ammann credited the strength in North America to climbing U.S. market share and increased sales volumes overall. GM's U.S. market share grew to 19.6 percent through the end of April, from 18.7 percent in the first-quarter of 2010, according to the Automotive News Data Center.
Higher volumes in the first quarter more than offset weaker prices, higher costs and the shift in product mix.
The trend toward sales of compact cars, and away from trucks, reduced profits by $100 million from the previous year, Ammann said. Costs rose $400 million for the quarter, mostly related to higher engineering and marketing expenses.
While prices rose during the quarter, Ammann said heavy discounts offered in January and February hurt net pricing, reducing GM's profit by $300 million vs. the prior year, Amman said.
Prices have risen 0.8 percent across-the-board since December (excluding incentives), including a 0.4 percent increase that GM announced last month to offset climbing raw-materials costs.
Ammann said the effect on profit margins from a shift away from more-profitable pickups and SUVs is blunted by GM's more-competitive car offerings.
"We're obviously putting the right vehicle portfolio forward for this kind of fuel environment," Ammann told reporters at GM's headquarters today. For example, Akerson said the Cruze compact's price is $3,000 higher than the Cobalt, which the Cruze replaced.
Europe is break-even
GM in Europe lost $390 million before interest and taxes, compared with a $490 million loss a year earlier. But it broke even on an operating basis in the latest quarter. GM is targeting break-even for the year in Europe.
GM's profits declined elsewhere in the world. Its international division, which includes China, had profits before interest and taxes drop from $908 million in the first quarter of 2010 to $480 million for the quarter this year. Ammann said the difference was because of an "unusually strong" performance in 2010.
In South America, earnings before interest and taxes fell from $265 million to $90 million. Ammann said GM is investing in the region to improve its product lineup, which pinched profits. "It's really a story about reinvesting in that portfolio and that region," he said.
GM Financial, the former AmeriCredit that GM acquired last year, chipped in $130 million in earnings, before interest and taxes.
Other one-time events
In addition to the gain on its Delphi sale, GM saw the following special items in the latest quarter:
- A $300 million gain on its sale of Ally preferred stock.
- A $400 million loss due to goodwill impairment at GM-Europe. GM also said it could experience future goodwill impairments in Europe, where it has $1.3 billion in good will still on the books as of March 31.
- A $100 million loss on an Indian joint-venture impairment and related charges.
In contrast, it had only one special item a year earlier: a $100 million gain on its sale of Saab.
UBS Securities analyst Colin Langan said in a research note this week that things should get better for GM as the year unfolds. Langan said GM stands to pick up 1.1 percentage points of market share at the expense of Japanese automakers, which face production shortages stemming from the March 11 earthquake and tsunami.
Langan wrote: "GM will be the biggest beneficiary of the upcoming Japan-related inventory shortages."