08/12/2010 Big profits for General Motors
General Motors Co. today reported net income of $1.33 billion in the second quarter -- its second consecutive three months in the black -- as it prepares to offer a public stock sale by year's end.
The company's performance was up from the first quarter when it reported $865 million in net income. That was GM's profitable quarter since 2007. But GM cautioned that for the rest of the year, financial results will "moderate."
Today's earnings statement is being keenly watched by market analysts; GM has been majority-owned by the government since it left bankruptcy protection in July of 2009 and is eager for the Treasury to sell off its stock.
Strong earnings may help boost the stock price at offering.
The automaker is expected to file paperwork Friday to set the wheels in motion for a public stock sale. It is also expected to announce by Friday that it has secured a $5 billion revolving line of credit -- a key step toward a public stock sale. GM Chairman and CEO Edward Whitacre said last week that GM was close to finalizing it.
GM said today it had improved results across the globe; in North America, it earned $1.6 billion before interest and taxes, up from $1.2 billion. It narrowed its losses in Europe to $200 million in the second quarter, down from $300 million.
"I am pleased with our progress on achieving our business objectives," said Chris Liddell, GM's vice chairman and chief financial officer.
"We have delivered strong product, maintained cost discipline, progressed strategic initiatives, such as restructuring Europe and acquiring (subprime lender) AmeriCredit, and delivered two consecutive quarters of profitability and positive cash flow."
The Detroit automaker's revenue in the first half of the year grew to $64.7 billion, up from $45.5 billion. GM earned $2.2 billion in the first six months of 2010, compared with an $18.9 billion loss in the first half of last year.
GM said it lost $12.9 billion in the second quarter last year, when it spent part of the period in bankruptcy protection.
GM is the last of the Detroit automakers to report second-quarter results. Ford Motor Co. made $2.6 billion, its fifth straight quarterly profit. Chrysler Group LLC, which got $15.5 billion in federal aid, narrowed its second-quarter loss to $172 million.
Source: D Shepardson / Detroit News Washington Bureau
P4P Comment
Whatever one thinks of the American government wiping the slate clean at GM, the fact is the tidal wave of government support for this company is good news for Detroit. That’s a lot more wages, meaning more ability to rent and buy houses in the City. All good for P4P investors.
From the beginning, we have advised our clients to hold on for between 3 to 5 years before exiting their USA foreclosed house investment. That will give time for the supply of repossessed properties to dry up and the recession in American to end, both factors that will greatly affect house prices.
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