UPDATE 3-GM's profit falls on recall costs, victims' compensation fund
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By Ben Klayman
DETROIT, July 24 (Reuters) - General Motors Co reported a much lower second-quarter profit on Thursday due to numerous recalls and the expected cost of at least $400 million for a compensation fund for those killed or injured by a defective ignition switch linked to at least 13 deaths.
GM also reiterated that it expected a moderately improved operating profit this year and that its future recall costs would be slightly higher than historic rates.
"We're on or ahead of the plan we shared in January," Chief Financial Officer Chuck Stevens told reporters. "Our expectation is that the second half of the year will be better than the first half."
Morgan Stanley analyst Adam Jonas said strong vehicle pricing in North America "saves the quarter."
GM earlier this year recalled 2.6 million cars for the faulty ignition switches, which can cause engine stalls and stop power steering and power brakes from operating and air bags from deploying. The company is under investigation by U.S. safety regulators, Congress and the U.S. Department of Justice over its failure to detect the problems for more than a decade.
Net income in the quarter fell to $190 million, or 11 cents a share, from $1.2 billion, or 75 cents a share, a year earlier.
Excluding one-time items, GM earned 58 cents a share, just below the 59 cents analysts polled by Thomson Reuters I/B/E/S had expected. Continued...