GM posts lower profit after recall; outlook for rest of year trimmed
By Ben Klayman and Bernie Woodall
DETROIT (Reuters) - General Motors Co's first-quarter profit tumbled 88 percent on Thursday due to the massive recall for defective ignition switches, and shares fell 1.3 percent after the company said expectations for the rest of the year must be trimmed.
While the company's results topped expectations on strong pricing for its redesigned pickup trucks in North America, it did not raise its full-year outlook by a corresponding amount.
GM said in January its 2014 earnings would finish slightly higher. While leaving the outlook for the full year unchanged on Thursday, Chief Financial Officer Chuck Stevens said the stronger first quarter means the outlook for the rest of the year will have to come down.
"We've changed the shape of the curve," he told analysts on a conference call. "We performed better than we expected in the first quarter, so we'll have to trim some of the expectations Q2 through Q4."
Citi analyst Itay Michaeli said he was not concerned about the outlook for the remainder of the year. "We did not view this as a negative, but rather a typical comment from a company refraining from raising an outlook this early in the year."
The quarter included a previously disclosed charge of $1.3 billion for the recall and Stevens said it was too early to predict whether there would be more charges. He reaffirmed the $1.1 billion in 2014 restructuring costs GM forecast in January.
Stevens also said the company was still studying its options for the victims of the faulty switches, which have been linked to at least 13 deaths. Safety advocates and some lawmakers have called for GM to establish a victims' compensation fund.
"Obviously, the recall campaign charges in the first quarter overshadows the headline results, but if you look underneath that, we had strong performance across the board," Stevens told reporters at the company's Detroit headquarters. GM Chief Executive Officer Mary Barra said that calling the first quarter "challenging" was an understatement. Continued...