GM reported $1.2 billion in Q2 profits.
General Motors managed to reduce losses stemming from its European operations, however, the Detroit-based automaker still saw its net income drop 20% to $1.2 billion, or 75 cents per share, in the second quarter compared with the year-ago figures.
The earnings are similar to those of Ford, which also reported earnings of $1.2 billion. But the biggest difference is that those results were an 18.5% improvement over the previous year’s results.
On a positive note, GM’s revenues increased by 3.9% to $39.1 billion and earnings before interest and taxes also increased 7.4% to $2.3 billion.
However, GM said the second quarter results also included a net loss from special items that reduced net income by $200 million, or 9 cents per share.
The results were also impacted by increased tax expenses of $500 million or 29 cents per share, compared to the second quarter of 2012.
“We continue to perform well in the world’s two most important markets, the U.S. and China,” said Dan Akerson, GM chairman and CEO, in a statement that accompanied the quarterly financials. “We also made further progress in our European business and saw the steady performance of our global brands Chevrolet and Cadillac.
“For the rest of the year, we’ll focus on winning customers with high-quality vehicles at a compelling value.”
While the company had faced significant accounting issues that drained income, the latest introductions helped carry the maker to profitability.
“Our results in this quarter were clearly pegged to winning vehicles like the Cadillac ATS, Chevrolet Impala and Opel Mokka,” said Dan Ammann, GM executive vice president and CFO. “We will continue to address our business challenges head-on, execute flawless launches of our future products and most importantly, satisfy our customers.”
Analysts expect it will be a continuing influx of new product, in particular its all-new 2014 full-size truck lineup, that will help the maker in the coming quarters post even better financial results.
GM North America reported EBIT-adjusted of $2 billion, compared with $1.9 billion in the second quarter of 2012, GM Europe reported an EBIT-adjusted loss of $100 million, compared with a $400 million in the second quarter of 2012.
GM hasn’t posted a profit in Europe in more than a decade and is battling to cut costs in its manufacturing and engineering operations while dealing with outside forces from consumer confidence at an all-time low as well as the debt issues plaguing the continent.
The automaker’s International Operations, which includes GM’s share of income from its joint ventures in China, reported EBIT-adjusted of $200 million, compared with $600 million in the second quarter of 2012.
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GM South America reported EBIT-adjusted of $100 million, compared with breaking even in the second quarter of 2012. In addition, GM Financial earnings before tax was $300 million for the quarter, compared to $200 million in the second quarter of 2012.
For the quarter, automotive cash flow from operating activities was $4.5 billion and automotive free cash flow adjusted was $2.6 billion. GM ended the quarter with very strong total automotive liquidity of $34.8 billion. Automotive cash and marketable securities was $24.2 billion compared with $24.3 billion for the first quarter of 2013.
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Meanwhile, a new report from U.S. Department of Treasury estimated that the value of GM stock would have to soar to $95 per share for taxpayers to break even on the 2009 bailout of the company. GM shares are currently trading for around $37 per share.