Here’s a bit of good economic news: General Motors has posted its first quarterly profit in three years — news that will likely be touted by the White House ad nauseum and either ignored or denegrated by many Republicans in an election year coming within the context of megapartisanship:
General Motors said Monday it earned $865 million in the first quarter, its first profit since 2007, after last year’s government-sponsored bankruptcy allowed the carmaker to wipe away many of its longstanding burdens.
G.M. said revenue was up 40 percent, to $31.5 billion, and it had positive cash flow of $1 billion.
The results show that G.M. is on track to become a public company again as soon as the fourth quarter, allowing the government to recover more of the billions of dollars it spent preventing G.M.’s collapse.
The company earned $1.2 billion before interest and taxes in North America, the region where G.M. had sustained most of its losses in recent years. In the fourth quarter, G.M. lost $3.4 billion in North America.
Worldwide, G.M. earned $1.7 billion before interest and taxes.
European operations lost $500 million.
“We’re pleased with our first quarter performance, in particular achieving profitability,” Christopher P. Liddell, the chief financial officer, said in a statement. “In North America we are adding production to keep up with strong demand for new products in our four brands. We’re also steadily growing in emerging markets, keeping our costs under control, generating positive cash flow and maintaining a strong balance sheet.”
There’s still some fight left in General Motors, as the company continues to work back from the brink of its demise.
Monday morning’s earnings report showed the Detroit automaker managed to earn $1.66 per share on revenue of $31.5 billion in the quarter ended March 31, after a loss of $9.78 per share on $22.4 billion in revenue a year earlier. The company’s $865 million first-quarter profit marked its first three-month period out of the red since a $891 million profit in the second quarter of 2007.
“There is no denying that this is a significant turnaround and keeps them on track” for a stock offering, said Rebecca Lindland, auto industry analyst at IHS Global Insight.
Lindland said it looked like GM was working for a stock offering by the end of this year but noted that that would be “aggressive” and depended on factors outside of the automaker’s control, such as the global economy and the health of the stock market.
GM officials said they were pleased about posting their first profit in years.
“We’re pleased with our first-quarter performance, in particular achieving profitability,” “In North America, we are adding production to keep up with strong demand for new products in our four brands. We’re also steadily growing in emerging markets, keeping our costs under control, generating positive cash flow and maintaining a strong balance sheet. These are all important steps as we lay the foundation for a successful GM,” Chris Liddell, GM’s chief financial officer, said in a statement.
New models are helping GM to recover from its slump and a bankruptcy reorganization that left the U.S. government as its majority owner. Five new-generation models — Chevrolet’s Equinox and Camaro, the GMC Terrain, Buick Lacrosse and Cadillac SRX — sold in April at a combined rate nearly 300% over the vehicles they replaced. Those models accounted for more than 110,000 of the 183,614 vehicles GM sold last month.
Through the first four months of this year, GM sales have risen 14%, slightly lagging the industry-wide increase of 16.7%.
Perhaps GM should name its next new car the Lazarus after the New Testament figure who rose from the dead. Or the Phoenix after the bird of legend that rose from the ashes.
Because GM has done essentially that. It wasn’t quite dead but less than two years there were some voices who doubted if the company could survive.
But after a nearly $7 billion loan from U.S. taxpayers and reorganizing in bankruptcy, the carmaker reported a first quarter 2010 profit of $865 million. It was the automaker’s first profit since 2007.
Even so, get ready for political hype and spin on both sides. The bottom line: it’s good economic news, good news for all Americans, Democrats, Republicans and independents — particularly if this isn’t a little detour from long range bad GM news but the beginning of a real upward trend.
Joe Gandelman is a former fulltime journalist who freelanced in India, Spain, Bangladesh and Cypress writing for publications such as the Christian Science Monitor and Newsweek. He also did radio reports from Madrid for NPR’s All Things Considered. He has worked on two U.S. newspapers and quit the news biz in 1990 to go into entertainment. He also has written for The Week and several online publications, did a column for Cagle Cartoons Syndicate and has appeared on CNN.