Newspaper article THE JOURNAL RECORD

GM Surprises Analysts with "Good, Solid" Earnings

Newspaper article THE JOURNAL RECORD

GM Surprises Analysts with "Good, Solid" Earnings

Article excerpt

DETROIT (AP) -- General Motors Corp., boosted by its biggest profits in North America in 13 years, reported a somewhat surprising 76 percent increase in first quarter earnings Monday.

Though GM's worldwide sales were down slightly in the January- March period, the world's largest automaker benefited from reduced material costs and improved productivity from retooled U.S.assembly plants.

"This was just a good, solid quarter," analyst Joe Phillippi of Lehman Brothers said. "It looks like they're on track to have a pretty good year." GM said it earned nearly $1.8 billion, or $2.30 a share, compared with $1.02 billion, or 94 cents a share, in the same period of 1996. Revenues totaled $42.3 billion, up 8 percent from $39.2 billion. Earnings from continuing operations more than doubled from a year ago after adjusting first quarter 1996 earnings to exclude the $219 million earned from GM's former Electronic Data Systems Corp. unit. The automaker split off EDS in June. GM's year-to-year comparison benefited from a weak first quarter last year, when GM took a charge of $900 million, or $1.20 a share, for a 17-day strike at two Ohio brake plants. The strike virtually shut down GM's North American production. But the strength of GM's North American unit was noteworthy. It earned $764 million, compared with a $279 million loss in the same period of 1996. "This is a clear indication that (the North American unit) has regained its basic earning power, continues to build financial strength and is establishing an excellent foundation for the future," Chairman John F. Smith Jr. said. U.S. sales were down 1 percent in the first quarter. Sales over the next several months will be a better indicator of how competitive GM's new model lineup is likely to be, as many models reach full production. But GM still has scattered labor problems to resolve. …

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