General Motors posted Friday a whopping 15.5-billion-dollar net loss in the second quarter as the beleaguered US auto giant took hefty restructuring charges amid skidding US sales.
The bleak earnings reported by the largest US automaker coincided with news of a seventh straight month of US nonfarm job losses, driving the unemployment rate up to 5.7 percent, the highest level in four years, and stoking concerns that the world's largest economy is nowhere near the road to recovery.
GM said its loss per share in the second quarter was 27.33 dollars, compared with a 1.37 dollar earnings per share in the second quarter of 2007.
But excluding special items, the loss per share was 11.21 dollars, nearly four times the market expectations of a 2.63 dollar adjusted loss, compared with adjusted earnings per share of 2.30 dollars a year ago.
"As our recent product, capacity and liquidity actions clearly demonstrate, we are reacting rapidly to the challenges facing the US economy and auto market, and we continue to take the aggressive steps necessary to transform our US operations," GM chairman and chief executive Rick Wagoner said in a statement.
The massive quarterly net loss compared with a net profit of 891 million dollars in the same period in 2007 and included 9.1 billion dollars in special charges.
Combined with a first-quarter loss of 3.3 billion dollars, GM has wracked up 18.8 billion dollars in the red in the year to date, putting the company on track to repeat its 2007 loss of nearly 39 billion dollars.
GM shares pared opening losses and were off 1.63 percent at 10.89 dollars in late morning trade in New York.
"On balance, (a) weak set of results, but not as bad as headlines suggest," said Himanshu Patel, an analyst at JP Morgan.
The Detroit, Michigan-based company already had flagged a significant second-quarter loss in mid-July, citing the costs of its massive restructuring program and additional job cuts aimed at adjusting to the steep downturn in the US auto market.
The sluggish US economy, roiled by the worst housing market slump in decades, financial turmoil and soaring oil prices, has slashed sales of gasoline-guzzling large trucks and sport utility vehicles (SUVs), the mainstay of GM's domestic sales, in recent months.
GM has taken drastic measures to adjust to its steady loss of US market share, including the elimination of tens of thousands of jobs, cost cutting, plant closures and switching some production into more fuel-efficient cars and crossovers, SUVs built on car platforms.
The automaker also is considering the sale of its gasoline-guzzling Hummer brand.
"We have the right plan for GM, driven by great products, building strong brands, fuel-economy technology leadership and taking full advantage of global growth opportunities," Wagoner said.
GM said its second-quarter results were primarily driven by "significant losses" in GM North America, where sales volume plunged 20 percent in a "markedly weaker US auto market."
In North America, net pretax losses nosedived to 9.3 billion dollars from 88 million dollars a year ago.
Revenue for the second quarter was 38.2 billion dollars, down 18 percent from 46.7 billion in the year-ago quarter, mainly due to falling sales in GM North America (GMNA).
The US sales decline was somewhat offset by sales gains in Europe, Asia Pacific, Latin America, Africa and the Middle East regions that totaled 20.8 billion dollars, up 1.7 billion from the 2007 second quarter.
GMAC, the financial services arm in which GM holds a 49 percent stake, lost 2.5 million dollars due to its exposure to the US subprime home mortgage crisis.
Source: AFP American Edition
