By Ben Klayman and Deepa Seetharaman
DETROIT (Reuters) - General Motors Co
Shares in GM rose 4.5 percent to $31.54, near its initial public offering debut of $33 in the fall of 2010.
GM Chief Financial Officer Dan Ammann said the company still expects to return to breakeven by mid-decade in Europe, where it has reported 13 straight years of losses. RBC Capital Markets analyst Joseph Spak welcomed the results, pointing to the company's ability to cut costs.
"Better-than-expected results (in Europe) will be well received, giving investors confidence that progress is being made and breakeven by mid-decade is possible," he said in a research note.
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Net income attributable to common stockholders fell 13.5 percent to $865 million, or 58 cents a share, in the first quarter, from $1 billion, or 60 cents a share, in the year-earlier period. The company took a $400 million hit to earnings due to falling prices for its vehicles and weaker volume.
The latest quarter included a $162 million noncash charge for the devaluation of the Venezuelan currency.
Excluding one-time items, GM earned 67 cents, topping the analysts' estimate of 54 cents, according to a poll by Thomson Reuters I/B/E/S.
Revenue fell 2.4 percent from last year to $36.9 billion, and was just above the Wall Street target of $36.6 billion.
GM's North American unit reported operating profit of $1.41 billion, better than the Wall Street estimate of $1.21 billion, according to FactSet StreetAccount. The result was down from a year ago due to higher costs from preparing plants for new vehicle launches, especially the redesigned Chevrolet Silverado and GMC Sierra full-size pickup trucks, as well as lower shipments because those plants were down.
The company also saw a $200 million drop in operating earnings as it was forced to offer pricing deals on its current large truck line ahead of the launch of the new models.
However, GM kept costs flat in the region, which was better than anticipated. In January, company officials said costs would increase this year.
RBC's Spak said the North American unit's 6.2 percent profit margin was stronger than the 4.7 percent he expected.
A loss of $175 million in Europe was smaller than the $469 million loss that Wall Street estimated, according to FactSet. In the region, GM cut $300 million in costs and was able to keep the pricing on its vehicles unchanged, both better than anticipated.
Ammann said the year was off to a "solid start," but added that company officials don't see any signs of a turnaround in Europe. "It's too soon to call a bottom in Europe," he told reporters.
Morgan Stanley analyst Adam Jonas said in a research note that it was the first time the region topped Wall Street expectations in nearly two years and the first year-over-year improvement in results in five quarters.
The international unit, which includes China, had an operating profit of $495 million, while South America recorded a small $38 million loss. Both results were weaker than expected.
Ammann said strong results in China were offset by weakness in the rest of the international operations. He said the South America business is expected "to build" this year on last year's profit.
GM said adjusted free cash flow in the quarter was a negative $1.3 billion due mostly to the lower earnings and timing-related items that it said would reverse during the rest of the year.
The Detroit automaker ended the quarter with total liquidity of $35.3 billion in its automotive business.
(Reporting by Ben Klayman and Deepa Seetharaman; Editing by Jeffrey Benkoe)
