Thursday, April 20, 2006

GM's quarterly loss bigger than expected

GM's quarterly loss bigger than expected

By John Nolan

Staff Writer DAyton

General Motors Corp. on Thursday reported a first-quarter loss of $529 million, or 94 cents per share, compared with a loss of $988 million, or $1.75 per share, for the first three months of 2005.

The latest loss was more than double the 44-cent-per-share loss collectively predicted by industry analysts surveyed by Thomson Financial. And it was the sixth consecutive quarterly loss GM has reported.

But, GM said the latest quarter included an after-tax charge of $681 million — $1.20 per share — for the recent settlement with its largest labor union, the United Auto Workers, concerning the company's health care obligations for retired hourly workers and their families. GM said that settlement, approved by a federal court, will allow the automaker to reduce its retiree health care liability by 25 percent — about $15 billion.

Rick Wagoner, GM's chairman and chief executive officer, said the company has begun the turnaround it needs to deal with last year's $10.6 billion loss and the decline to 25 percent of its share of the North American auto market.

GM made progress in increasing its average revenue per vehicle sale, a sign the company is reducing its reliance on incentives to sell cars, said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. The company is making the necessary adjustment to market demand by reducing its work force and shuttering unneeded manufacturing plants, Cole said Thursday.

Shares of GM (NYSE:GM) were up $1.81, or nearly 9 percent, at midday Thursday to $22.38, with trading at nearly double the normal daily volume of 12.4 million shares. The price has ranged between $18.33 and $37.70 during the past year.

The company's first-quarter revenue increased 14 percent to a record $52.2 billion. Global auto sales increased 4.4 percent to 2.2 million units, but GM's share of the worldwide market still slipped slightly to 13.2 percent from 13.3 percent a year ago.

GM's first-quarter loss was reduced to $323 million, or 57 cents per share, when it included the net effect of a $206 million gain, or 37 cents per share. That $206 million included a profit from sale of most of GM's stake in Suzuki and GM's costs of restructuring in North America and overseas.

Separately, members of Local 798 of the International Union of Electronic Workers-Communications Workers of America are voting Thursday on whether to approve a new hourly labor agreement at GM's Moraine sport utility vehicle plant. If approved, that deal would grant GM new work rules that the company says it needs to consider awarding Moraine new SUV assembly work beyond 2008.

The new contract would take away a pay raise averaging 83 cents per hour that Local 798 members would otherwise receive this September. The Moraine plant employs 4,100 people, including about 3,800 hourly production workers.

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