GM profit beats Street on aggressive cost-cutting in Europe
By Ben Klayman and Deepa Seetharaman
DETROIT (Reuters) - General Motors Co (GM.N: Quote) posted a higher-than-expected second-quarter profit on Thursday as aggressive cost-cutting helped the U.S. automaker narrow its losses in Europe.
Higher prices on new models such as the 2014 Chevrolet Silverado pickup truck and Impala large sedan boosted results in its core North American market. Executives said those results will improve further in the second half thanks to other new high-margin vehicles.
"The biggest news in the quarter is just Europe is not as bad," said Guggenheim Securities analyst Matthew Stover, who has a "neutral" rating on GM's stock.
Europe, where auto industry sales hit a 20-year low in the first half, remains "very challenging," GM Chief Financial Officer Dan Ammann said. He added it was too soon to call any sort of improvement there.
That was in marked contrast to U.S. rival Ford Motor Co (F.N: Quote), which on Wednesday reported a smaller-than-anticipated loss in Europe and said the region could be stabilizing.
GM executives aren't ready to go that far. "A demand-driven recovery (in Europe) isn't in sight yet," GM Chief Executive Dan Akerson said on a conference call.
GM's money-losing European unit has been a key focus for investors since the automaker went public in the fall of 2010 following a bankruptcy reorganization and a $49.5 billion government bailout. In November 2011, Akerson charged Vice Chairman Steve Girsky with overhauling the European operations, which have suffered 13 straight years of losses.
GM's net income in the second quarter fell to $1.2 billion from $1.5 billion a year earlier, hurt by higher costs related to the rollout of its redesigned full-size pickup trucks and losses in Asia outside of China. Continued...