* Analysts expect EPS of $1.20, sales of $36.7 bln
* Performance of GM's high-profit big truck is critical
* Worries weak U.S. economy could lead to more incentives
By Ben Klayman
DETROIT, Aug 4 (Reuters) - General Motors Co is expected to post a quarterly profit on Thursday, demonstrating the largest U.S. automaker can thrive in an auto market that has stalled because of consumer uncertainty about the economy.
Investors will focus on GM's highly profitable full-size pickup truck, also known by its GMT 900 code name, and the risk of a slowdown or double-dip recession in the U.S. market in the second half of the year, Barclays analyst Brian Johnson said.
Coming out of its 2009 bankruptcy, GM's chief executive Dan Akerson and other executives said the company had stripped out enough costs to recession-proof the business so it could thrive even in a weak auto market.
The industry's sales slump in the second quarter and the risk of a double-dip recession could provide investors the first major test for that hypothesis.
GM is pushing heavily into smaller, more fuel-efficient cars like the popular Chevrolet Cruze, but a good portion of its profit still relies heavily on sales of more profitable trucks in the U.S. market.
"The debate around GMT 900 production and inventories is likely to color much of the earnings call discussion and investors' interpretation," Johnson said in a Wednesday research note, adding GM shares had "stalled" with the weak economy.
Analysts, on average, expect GM to report a second-quarter profit of $1.97 billion on sales of $36.71 billion, according to Thomson Reuters I/B/E/S. Excluding one-time items, they expect per-share earnings of $1.20.
This will be the second full quarter since GM's initial public stock offering last November. The company filed for bankruptcy after a U.S. housing downturn and a spike in gasoline prices in 2008 caused consumers to turn away from high-profit trucks.
GM emerged from bankruptcy after 40 days thanks to a $52 billion taxpayer-funded bailout. The U.S. Treasury still owns 32 percent of GM's common shares.
The big pickup truck, with its estimated $10,000 per vehicle profit margin, is critical for GM.
The company built up inventory on the pickups ahead of a changeover next year to a new model, but was criticized heavily last month for its 122-day supply at the end of June. GM this week said it was targeting a 90 day supply by year end.
With the U.S. market so shaky, the focus is also on the mix of cars and trucks sold. That worries investors as consumers are buying more small vehicles, which generate far less profit.
Add in fears about the fragile state of consumer demand as the industry rolls into the second half and investors are left to wonder whether GM, in fact, is positioned to thrive.
"Something did go wrong in the second quarter," Citi analyst Itay Michaeli said in a research note. "The pace of the U.S. (annual sales rate) recovery slowed."
GM's U.S. sales in the second quarter rose more than 11 percent from last year, but average transaction prices slipped almost 2 percent even as GM cut incentive spending by almost 17 percent, according to TrueCar.com. That suggests lower-profit vehicles were a bigger piece of the pie.
If a second-half recovery does not happen, analysts and investors fear a return by GM to the old ways of throwing large incentives at buyers to move vehicles off dealer lots. GM's first-quarter results were marred by heavy incentives, but the automaker has dialed back on those deals.
GM investors have other hopes as well. They would like to hear details on plans for the company's more than $30 billion in cash as well as a timeframe for when U.S. Treasury will exit its GM stake. However, they do not expect answers to those questions when GM reports its results.
(Reporting by Ben Klayman in Detroit; Editing by Matt Driskill)