GM Records 1Q Profit
DETROIT — General Motors said it returned to profitability in the first quarter, reporting net income of $900 million and operating income of $1.2 billion on total revenues of $31.5 billion.
The automaker recorded adjusted EBIT of $1.7 billion. GM said this was determined following adjustments it made for the favorable impact of selling the Saab brand.
GM North America posted $1.2 billion in first-quarter EBIT. This marks a notable gain from its $3.4 billion loss in the prior quarter.
Officials noted that the automaker had $1.7 billion in cash flow from operating activities. After GM adjusted for capital expenditures, free cash flow stood at $1 billion.
As of the end of the quarter, the automaker's cash and marketable securities totaled $35.7 billion. This sum includes funds in escrow.
"In summary, it was an extremely good first quarter for General Motors," said Chris Liddell, vice chairman and chief financial officer during the automaker's quarterly conference call on Monday. "Posting a profit and generating positive cash flow are important steps as we work to rebuild General Motors."
Liddell would later add that he found "the most encouraging thing" in GM's North American operations is "that we're seeing the market share of our core brands going up, at the same time incentive levels are going down, and average transaction prices are going up.
"The overall brand strategy of focusing on a few number of nameplates, focusing on higher value where we can and lowering the incentive structure, at least at this early point of the year, looks like it's paying off very well," Liddell continued.
Chiming in, Chuck Stevens, chief financial officer for North America, noted: "The core brand strategy and aligning supply and demand has not only helped our overall level of transaction prices and reduced incentives, but it's also significantly improved our fleet profitability over the last 24 months to the point now where daily rental and other rental fleet business is a reasonably profitable venture for us."
In its summary to its earnings report, GM honed in on five key points, the first being that automaker was profitable and generated positive cash flow in the first quarter.
Moreover, the automaker's U.S. share for its four core brands was up, the automaker used fewer retail incentives and GM North America's breakeven point was dramatically reduced.
Next, the GM said it is "well positioned to grow profitably" as far as its international operational, while acknowledging there is "more work to do" in Europe.
"But most importantly of all, I believe we continue to make great progress in our vision of designing, building and selling the world's best vehicles," Liddell noted. "Achieving profitability is a nice reflection of that."