GM posts $15.5 bln loss as US sales slump
Saturday, 02 August 2008

AFP, WASHINGTON - General Motors, the leading US automaker, posted Friday a 15.5 billion dollar net loss in the second quarter, citing hefty restructuring charges, plummeting US sales and union strikes.

The loss per share excluding special items was 11.21 dollars, nearly four times the market expectations of a 2.63 dollar loss, compared with earnings per share of 2.30 dollars a year ago.

The massive quarterly net loss compared with a net profit of 891 million dollars in the same period in 2007.

The loss included 9.1 billion dollars in charges for mostly non-cash special items.

Combined with a first-quarter loss of 3.3 billion dollars, GM now has accumulated 18.8 billion dollars in losses this year, putting the company on track to repeat its 2007 full-year loss of nearly 39 billion dollars.

GM warned in mid-July that it anticipated a significant second-quarter loss because of the special charges associated with its vast restructuring program and job cuts aimed at battling a steep downturn in the US auto market.

A slowing US economy roiled by the worst housing market slump in decades and financial turmoil, as well as soaring gasoline prices, have slashed sales of fuel-guzzling large trucks and sport utility vehicles (SUVs), the mainstay of GM's domestic sales, in recent months.

The company has taken drastic measures to adjust to its steady loss of market share in the weakening US auto market, including eliminating tens of thousands of jobs, cutting costs, closing plants and switching production into more fuel-efficient cars and crossovers, SUVs built on car platforms.

The automaker also is considering the sale of its gasoline-guzzling Hummer brand.

"As our recent product, capacity and liquidity actions clearly demonstrate, we are reacting rapidly to the challenges facing the US economy and auto market, and we continue to take the aggressive steps necessary to transform our US operations," GM chairman and chief executive Rick Wagoner said in a statement.

"We have the right plan for GM, driven by great products, building strong brands, fuel-economy technology leadership and taking full advantage of global growth opportunities."

Revenue for the second quarter was 38.2 billion dollars, down 18 percent from 46.7 billion in the year-ago quarter, mainly due to falling sales in GM North America (GMNA).

The second-quarter revenue figure came in below most analysts' forecasts of 44.6 billion dollars.

The US sales decline was somewhat offset by sales gains in Europe, Asia Pacific, Latin America, Africa and the Middle East regions that totaled 20.8 billion dollars, up 1.7 billion from the 2007 second quarter.

GM said its second-quarter results were primarily driven by "significant losses" in GM North America, where sales volume plunged 20 percent in a "markedly weaker US auto market."

In North America, pretax losses nosedived to 9.3 billion dollars from 88 million dollars a year ago.

GMAC, the financial services arm in which GM holds a 49 percent stake, lost 2.5 million dollars due to its exposure to the US subprime home mortgage crisis.

"On balance, (a) weak set of results, but not as bad as headlines suggest," said Himanshu Patel, an analyst at JP Morgan.

In pre-market trade in New York, GM shares lost more than six percent.

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