GM losses 3.3 billion dollars; foreign sales strong (Roundup)

Business News

Apr 30, 2008, 16:13 GMT

Detroit, Michigan - The world's largest automaker General Motors (GM), fighting to keep the title after dropping behind Toyota in the first quarter, Wednesday reported first quarter losses of 3.3 billion dollars. But the figure was smaller than analysts had expected, and GM stock gained 12 per cent on Wall Street in early trading. Rising sales in Asia and Latin America tempered declines in the US, the company said. The automaker boosted profits by at least twofold in each of its other three regions. GM's European profit grew by more than 18 times to 75 million dollars, Bloomberg financial news service reported. The Asia-Pacific region doubled earnings to 286 million dollars on the strength of South Korean-designed Chevrolet small cars. The Latin America-Africa-Middle East region also doubled, to 517 million dollars. 'Most analysts are underestimating the strength of our overseas operations,' chief financial officer Ray Young was quoted as saying in Detroit. He also said that a restructuring of North American operations is reducing the drag on earnings. With the third straight quarter of losses, the company also reported that revenues for the period sank by nearly 2 per cent to 42.7 billion dollars. In 2007, the motor company had seen a loss of only 42 million dollars, but in the past three years, GM has suffered total losses of 50 billion dollars due particularly to weakness in the US market. The company also blamed high liabilities from its financing subsidiary as well as the insolvency of former distribution subsidiary Delphi. Excluding those charges, losses were 350 million dollars in the first quarter, the company said. Further weight pulling down income were restructuring costs and negative tax effect in Europe. The US company is in a neck-and-neck race with Japanese rival Toyota for the most sales worldwide. GM in the first quarter sold 2.25 million cars, lower than Toyota's 2.41 million. GM also dropped behind Toyota in the first quarter of 2007. For all of 2007, GM stayed ahead of Toyota by the skin of its teeth, besting the Japanese automaker by only 3,100 vehicles for the year. On Monday, GM announced it was set to lay off 3,500 workers as it prepared to reduce production of pickup trucks and heavy four-wheel vehicles due to falling demand.

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