GM Reports Record Earnings

General Motors Corp. reported record earnings of $2.1 billion for the first quarter Thursday, up 31 percent compared to the same quarter last year and exceeding Wall Street expectations on continued strong profits in North America.

GM earned $3.04 a share, compared with $1.6 billion, or $2.27 a share, during the same period of 1998. A survey of analysts by First Call Corp. estimated GM would earn $2.88 a share.

Sales at the world's largest automaker totaled $42.4 billion, up 6 percent from $40 billion a year ago. Revenue figures exclude the sale of Delphi Automotive Systems, the big parts unit that GM is in the process of spinning off.

GM's earnings including Delphi were a company record for any quarter, narrowly surpassing the $2.09 billion it earned in the second quarter of 1997.

"We're particularly pleased with the strong performance of GM North America and General Motors Acceptance Corp. in the first quarter," GM Chairman Jack Smith said.

The automaker's North American operations earned $1.4 billion, up 67 percent from the $841 million it earned in the first three months of 1998. Profits of GM's European operations increased 76 percent to $174 million, compared with $99 million a year ago.

Those performances offset losses of $60 million in Asia-Pacific and $25 million in Latin American operations. In the first quarter of 1997, GM earned $6 million in Asia-Pacific and $53 million in Latin America. Automakers have been struggling with the depressed economies in both regions during the past year.

GMAC, the company's financial subsidiary, earned $392 million, up 13 percent from $349 million in the comparable quarter of 1998.

"The financial results reflect our continued efforts to improve product quality and increase manufacturing efficiency," GM President G. Richard Wagoner Jr. said. "Combined with our unrelenting cost-reduction activities, these factors allowed us to meet the intense competitive price pressure."

The quarter marked the first time GM had back-to-back quarterly earnings increases since the first two quarters of 1997. It was the best quarter for GMAC since 1991.

GM's total automotive-related income, excluding Delphi, was $1.5 billion, compared with $1 billion a year ago.

Wagoner said GM's automotive operations benefitted from several new, highly profitable models in the North American market, led by the redesigned Chevrolet Silverado and GMC Sierra, twin full-size pickups. The big truck is GM's most popular model.

Although GM's U.S. vehicle sales were up 6 percent in the quarter, its market share declined to 28.8 percent from 30.2 percent in the first quarter of 1998 an indication of the strength of demand for new vehicles industrywide.

Market share in Europe was down slightly to 9.6 percent from 9.8 percent a year ago. Wagoner said GM was expecting gains with the recent introduction of the new Opel and Vauxhall Zafira minivan ad the new line of Opel Vectra sedans.