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GM posts record $1.92 billion profit


Powered by robust international sales and continued cost-cutting, General Motors Corp. more than doubled its net income in the second quarter, to a record $1.92 billion, the automaker reported yesterday.

GM's earnings for the quarter that ended June 30 amounted to $2.23 a share. In the second quarter of 1993, the automaker posted a profit of $889 million, or 92 cents a share.

Revenue rose 11.3 percent, to $40.39 billion.

John F. Smith Jr., who was promoted to chief executive of GM in November 1992 and was given the task of halting record losses and faliling market share, attributed the strong performance to better international results, improved profitability of the company's North American Operations and companywide reductions in cost.

But Mr. Smith vowed that GM would not take its stunning success for granted.

"We recognize that we can't get complacent. We still have a lot of work ahead to improve our earnings power and achieve target earnings margins," Mr. Smith said in a statement.

Net income of international automotive operations jumped 7 percent, to $543 million. Worldwide, GM sold 8.5 percent more vehicles in the quarter just ended than in the same period last year.

J. Michael Losh, chief financial officer, said the cost-cutting moves accounted for a third of the company's earnings improvement in the second quarter, or about $330 million.

Michael P. Ward, an analyst who follows GM for Kidder Peabody & Co. in New York, said Mr. Smith and his management team are "turning around the biggest corporation in the country, and they are doing it in dramatic fashion."

"They did better than we anticipated," he said, noting that he expected earnings for the April-June period of $2.10 a share.

Mr. Ward said that North American Operations -- which accounts for about 65 percent of GM sales -- posted a profit of $723 million in the second quarter, compared with a loss of $33 million in the same part of 1993. As recently as the third quarter of 1993, this unit was more than $1.5 billion in the red.

Despite the strong showing, GM's share of the total U.S. vehicle market slipped in the quarter to 33.1 percent, compared with 34.8 percent in the same period last year.

Another troublesome, but improving, area is the profit margins of the North American Operations, or NAO, as it is called. NAO's net margin was 2.7 percent in the quarter, compared with a loss of 0.1 percent of sales in the year-ago period.

"The dramatic improvement in NAO's margins is an encouraging sign that we are on track," said Mr. Smith. "We're still considerably short, however, of our five percent annual net margin target."

Results for the first six months of 1994 show consolidated net income of $2.8 billion, or $3.02 a share. This includes a one-time charge of $758 million, equal to $1.05 a share, for a change in accounting for employee disability benefits.

Excluding the impact of the accounting charge, income for the six-month period was $3.5 billion, or $4.07 a share. That compares with $1.4 billion, or $1.34 a share, for the first half of 1993.

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