General Motors Corp. reported the most profitable second quarter in its history yesterday as well as the best performance of Detroit's Big Three for the period, thanks in part to a 37 percent boost in earnings of its giant North American automotive operations.
The nation's largest automaker said consolidated net income for the quarter that ended June 30 rose 18 percent to $2.3 billion from $1.9 billion in the same period last year.
The gain, which was higher than analysts expected, was equal to $2.39 a share, up from $2.23.
GM had been expected to earn $2.25 a share, according to the average estimate by a dozen analysts by Zacks Investment Research. Prudential Securities, which was on the high side, estimated earnings of $2.30 a share.
Sales increased 9.3 percent to $44.15 billion from $40.39 billion in the corresponding period of 1994.
GM far outperformed its Detroit rivals, as its cost-cutting efforts paid off. Ford Motor Co. reported Wednesday that its net income fell 8.1 percent to $1.57 billion, or $1.45 a share. Chrysler Corp. said Tuesday its earnings plunged 86 percent to $135 million, or 35 cents.
"It's the world turned upside down," said Burnham Securities analyst David Healy. "GM is making more per vehicle than Ford."
GM earned about $650 a vehicle in North America, outpacing Ford's $579 and Chrysler's $452, Mr. Healy said. For GM, that marked a turnaround from a low point in the third quarter of last year, when it lost an average of $296 a vehicle.
"All of GM's major business sectors showed year-over-year improvements, with the bulk of the overall gain accounted for by our North American automotive operations [including Delphi Automotive Systems], despite lower volume," John F. Smith Jr., GM's chief executive and president, said in a statement.
The news was well received on Wall Street. GM's stock rose $1 to close at $49.625.
Profit from GM's critical North American operations soared to $880 million from $641 million even as vehicle sales declined 2.3 percent to 1.50 million from 1.54 million.
The North American operations traditionally account for half of GM's earnings, but in recent years it was blamed for the automaker's huge losses in the early 1990s.
Mr. Smith said that despite the improvement, North American operations still fall short of achieving the 5 percent annual net profit margin goal set by the company. Its margin for the quarter was 3.2 percent, up from 2.4 percent a year ago.
"NAO continued to build momentum in the implementation of its strategic plan to improve business in the highly competitive North American market," Mr. Smith said.
Despite its strong financial performance, GM saw its market share of the U.S. car and truck market both decline in the period. GM's share of the car market fell to 33.6 percent from 34.5 percent in the second quarter last year. Truck deliveries, which include the Chevrolet Astro and GMC Safari vans produced in Baltimore, slipped to 29.7 percent of the market from 31 percent.
For the six months that ended June 30, GM reported net income of $4.4 billion, or $4.70 a share, on sales of 87.4 billion. This compares with a net of $2.8 billion in the same period last year.