GM reports strong quarterly operating profits

[andy82471]

http://today.reuters.com/stocks/QuoteCompa...TE-1.XML&rpc=66

I have one question. What is the difference between operating profit vs net profit ?

I am guessing the net profit includes the cost of laying off 35,000 workers and closing 12 plants, right ?

DETROIT, July 26 (Reuters) - General Motors Corp. (GM.N: Quote, Profile, Research) on Wednesday posted a larger-than-expected quarterly operating profit as it slashed costs in North America and raised its cost-cutting target by $1 billion, sending its shares up 5 percent.

GM, the world's No. 1 automaker by sales volume, reported its net loss widened for the second quarter after writing down previously announced costs associated with buyouts for almost a third of its factory work force.

GM said its global automotive operations, excluding charges, posted their first profit excluding charges since 2004 after cost reductions in the core U.S. market.

The company raised its target for cutting recurring costs in North America by $1 billion to $6 billion by the end of 2006.

Total revenues for the second quarter rose to $54.4 billion from $48.5 billion. Revenue from auto sales rose 11 percent to $45.2 billion from $40.4 billion.

In response, GM shares surged 5 percent in premarket trading to $32.17 on the Inet brokerage system.

GM posted a second-quarter net loss of $3.2 billion, or $5.62 per share, compared with a loss of $987 million, or $1.75 per share, for the year-ago quarter.

Excluding charges, GM posted a profit of $2.03 per share. Analysts, on average, had forecast an operating profit on that basis of 51 cents per GM had not forecast its results, and analyst estimates ranged widely between 29 cents and 80 cents per share for the automaker's second-quarter earnings after excluding charges.

The company said it slashed the adjusted loss at its North American operations to $85 million in the quarter, excluding special items, marking an improvement of $1.1 billion from the year-earlier period, as it slashed costs, including cutting its ongoing pension expense.

Chief Executive Rick Wagoner has been under pressure to show improvement as the company studies a possible three-way proposal with Nissan Motor Co. Ltd. (7201.T: Quote, NEWS, Research) and Renault SA (RENA.PA: Quote, Profile, Research) in which the two could buy up to a 20-percent stake in GM.

That deal, urged by GM's largest individual shareholder, Kirk Kerkorian, has been widely viewed as a means of prodding Wagoner to speed the automaker's turnaround efforts after a $10.6 billion loss in 2005.

In recent months, GM has cut 35,000 factory jobs through buyouts and early retirement offers and clinched an agreement with its major union, the United Auto Workers, that reduces the company's share of health care costs.

GM shares, which have gained almost 60 percent since the start of the year, closed at $30.66 on Tuesday on the New York Stock Exchange on growing expectations that the automaker would report progress in its turnaround.

That marked the first time the stock has closed over $30 in nine months and took Kerkorian's $1.7-billion investment in GM back to profitability.

< Previous 1 | 2 Next > © Reuters 2006. All Rights Reserved.

Edited July 26, 2006 by andy82471

[!!!TED!!!]

General Motors Corp. Earnings Conference Call (Q2 2006)

Scheduled to start Wed, Jul 26, 2006, 9:30 am Eastern

You can listen live!

http://biz.yahoo.com/cc/9/69229.html

[andy82471]

General Motors Corp. Earnings Conference Call (Q2 2006)

Scheduled to start Wed, Jul 26, 2006, 9:30 am Eastern

You can listen live!

http://biz.yahoo.com/cc/9/69229.html

171560[/snapback]

Good job, Ted. Very interesting presentation to say the least.

[!!!TED!!!]

Stock opened at $31.91.

It is now rising, already at 32.30!

[nyscene911]

Stock opened at $31.91.

It is now rising, already at 32.20! 

171564[/snapback]

I'm still pissed I didn't pick some up early this year. Was all ready to, but found out my father was being laid off at work...

Ehh, oh well. There are bigger tragedies in life.

[!!!TED!!!]

$32.59

edit: $32.62

Will it go to 33???

[nyscene911]

32.90. Wall St. is going nuts on GM. Up 7+% already! Wow.

[!!!TED!!!]

Booya! $33.05!!!

[Newbiewar]

http://today.reuters.com/stocks/QuoteCompa...TE-1.XML&rpc=66

I have one question. What is the difference between operating profit vs net profit ?

I am guessing the net profit includes the cost of laying off 35,000 workers and

171553[/snapback]

well there is a one time loss of about 3.5 billion for buying out the 35k employees... GM did not lay them off... they chose to quit, and take 100k with them or whatever...

[andy82471]

well there is a one time loss of about 3.5 billion for buying out the 35k employees... GM did not lay them off... they chose to quit, and take 100k with them or whatever...

171573[/snapback]

Thanks for the correction. Forgot it was a employee buyback. Hopefully GM now has everything in place for a rapid recovery. They should just forget about joining the R/N alliance and concentrate on building desirable, and reliable cars. If Wagoner can really turn GM around I think he deserves a noble prize.

[jry]

net income is generally what is left after expenses. operating income is usually the cash available to run the business before taxes, etc.

[Newbiewar]

Thanks for the correction.  Forgot it was a employee buyback.   Hopefully GM now has everything in place for a rapid recovery. They should just forget about joining the R/N alliance and concentrate on building desirable, and reliable cars. If Wagoner can really turn GM around  I think he deserves a noble prize.

171577[/snapback]

so technically GM profited 1.2 billion this quarter... which is outstanding!

This 4.3 billion is very welcome by the public and the company because it reduces future overhead a lot! so it makes profitablity easier...

so despite the 3.5 billion loss this quarter this is good news, and it is expected...

[sciguy_0504]

Operating profit is what is left after expenses relating to the function of the company are taken out. For example, the cost of running factories. Net proft is what is left after taxes and special 1-time expenses.

Even so, GM had a pretty good quarter. Day traders are going crazy on the stock.

[Newbiewar]

Operating profit is what is left after expenses relating to the function of the company are taken out.  For example, the cost of running factories.  Net proft is what is left after taxes and special 1-time expenses.

Even so, GM had a pretty good quarter.  Day traders are going crazy on the stock.

171680[/snapback]

i have a feeling GM is about to become a profit machine...

they are spending so much on the future and profiting?

i mean the silverado isnt even here... can u imagine if there wasnt 4500$ rebates on GM's best seller? and to top it off, increase sales on the silverado because of new model?

what about saturn? we've already got record revenue... lets see saturn blow up... 20% increase in sales...

I think we are about to see a very glorous time for GM...

with Zeta and lambda around the corner i think GM has a chance to grow massively... also i think there are plenty of band wagoon people who will start to buy GM...

[LTB51]

Some numbers, YTD.

Revenue up 13% while units are down 12%. Expenses up 13% (9% minus the 4.4 Billion restructuring charges... at least I assume this is an expense and not a liability... I haven't found the details yet).

Year/Vehicle Sales/Revenue/Revenue per Vehicle/Expense pre Vehicle

2006 2,066,957 88.3 42.7K 41.7K

2005 2,352,370 77.4 32.9K 32.2K

Which works out to $251 more profit/vehicle, or ~300 Million more profit on automotive. What is interesting in the large upward shift of both revenues and expenses.

Financing and Insurance (GMAC?) revenue down 33%

Cash and marketable securitys down 32 Billion in one year (55 -> 23)

Pension Liabilities up 6 Billion.

Non-pension post-retirment benefits up 5 Billion.

Liabilities up 16 Billion in total.

What is this shift to "Assets Held for sale"? 0 -> 274 Billion? And "Finance Receviables -- net"? 178 -> 4 Billion? And the same thing on the Liabilities side with "Liabilities related to assets held for sale" and "Notes and loans payable". Not sure what that is about.

Edited July 27, 2006 by LTB51

[ellives]

What is this shift to "Assets Held for sale"? 0 -> 274 Billion? And "Finance Receviables -- net"? 178 -> 4 Billion? And the same thing on the Liabilities side with "Liabilities related to assets held for sale" and "Notes and loans payable".  Not sure what that is about.

171871[/snapback]

I haven't read any releases yet but if I had to make an educated guess I'd say these items are related to the sale of GMAC.

[fbodfather]

Good Lord!

This news could just KILL BM!!!

I think Hezzbollah must be behind these numbers!!!!!!

[thegriffon]

Don't get too excited tere are more charges to come as part of the previously announced restructuring expenses. These may exceed operating profits for some time yet.

[Newbiewar]

Don't get too excited tere are more charges to come as part of the previously announced restructuring expenses. These may exceed operating profits for some time yet.

171973[/snapback]

but they will always be isolated, as in this report... a one time expense of 4.3 billion but yet the world is happy operating profits are there...

so these one time expneses are small investments to a more profitable tomarrow... they are always welcomed by the investors...

[Mr.Krinkle]

theres no quick fix money back 30 day limited warranty answers to solve these problems. the entire production method and the cost structure needed to be addressed.... and it finally it is. and the market is receptive to that.

gm stock has been steadily increasing. but not only that there seems to be a real effort to compete again. not just slap a badge or a cool name on a half way decent product. a real drive to reclaim its rightful place in the automodum heirarchy.

actions speak louder than words and the results will speak for themselves.

its too bad people look down their noses sometimes.

one phrase comes to mind lately while looking over these numbers.

dont wake the sleeping giant.

gm still got plenty of huff and puff left. and it aint all smoke thats blowing out.

[I hope GMRULES again]

I enjoyed listening to that but I got fed up after 25 minutes.

[LTB51]

but they will always be isolated, as in this report... a one time expense of 4.3 billion but yet the world is happy operating profits are there...

so these one time expneses are small investments to a more profitable tomarrow... they are always welcomed by the investors...

171981[/snapback]

It is a shell game. The 4.3 billion was a one-time expense. However, in the last 1 year period they underfunded their benefits by 11 Billion. If they had kept up they would have taken an extra 2.75 Billion in expenses each Q (and even then I imagine the benefits are vastly underfunded). That would again have left them with a huge loss again this Q.

They purposely shifted money around to make it look like they made a profit. But they are "stealing" from the workers as it is the workers who will be out that money if GM doesn't pull through.

In addition to this benefits shortfall, there are other "one time" expenses coming and GM is still losing huge amounts of money.

Still the 30% increase in revenue per vehicle is impressive, I'm just not sure where that extra $10,000+ per vehicle is coming from. I haven't heard that prices/incentives have changed that much, and car sales are doing better than SUV/Truck sales so ASPs should tend to go down.

Also, have you noticed how there is a "one-time expense" pretty much every Q? Leaky ship.

[Drew Dowdell]

one phrase comes to mind lately while looking over these numbers.

dont wake the sleeping giant.

171994[/snapback]

GM to the rest of the automotive world: "Now you went and pissed me off!"

Edited July 27, 2006 by Oldsmoboi

[Newbiewar]

It is a shell game.  The 4.3 billion was a one-time expense.  However, in the last 1 year period they underfunded their benefits by 11 Billion.  If they had kept up they would have taken an extra 2.75 Billion in expenses each Q (and even then I imagine the benefits are vastly underfunded).    That would again have left them with a huge loss again this Q.

They purposely shifted money around to make it look like they made a profit.  But they are "stealing" from the workers as it is the workers who will be out that money if GM doesn't pull through.

In addition to this benefits shortfall, there are other "one time" expenses coming and GM is still losing huge amounts of money.

Still the 30% increase in revenue per vehicle is impressive, I'm just not sure where that extra $10,000+ per vehicle is coming from.  I haven't heard that prices/incentives have changed that much, and car sales are doing better than SUV/Truck sales so ASPs should tend to go down.

Also, have you noticed how there is a "one-time expense" pretty much every Q?  Leaky ship.

172164[/snapback]

well that is coming from us dealerships...

that 10k + per vehicle...

the GMT900 are demanding extremely high prices without rebates

so in the previous year all of these GMT900 were being rebated, GM card, etc... 5,6 even 8k$ rebates...

and not only did that entirely go away, but the invoice prices went up by about 1000 or more in some cases, and the retail price went down... forcing the salesforce to work harder to acheive more sales...

the Total value program is designed to work on all ends, the customer end, and the dealer end to increase business...

also without fleeting the impalas and what not, the vehicles are holding a much higher point of sale price...

Edited July 27, 2006 by Newbiewar

[toyoguy]

If the stock keeps increasing it's possible Renault-Nissan can't come up w/the cash to take a 20% stake.

[hyperv6]

Anyone take not Goshen's recovery has started to stall.

The lack of new product and lack of increase in sales has slowed their recovery.

If GM can be lucky to maintain this trend it would be great.

My worry is how world event will paly on the oil prices and economy. This is one area GM has no control over.

GM has a ways to go but this is one more step toward recovery. Kepp her going Rick!

[LTB51]

the GMT900 are demanding extremely high prices without rebates

so in the previous year all of these GMT900 were being rebated, GM card, etc... 5,6 even 8k$ rebates...

and not only did that entirely go away, but the invoice prices went up by about 1000 or more in some cases, and the retail price went down... forcing the salesforce to work harder to acheive more sales...

the Total value program is designed to work on all ends, the customer end, and the dealer end to increase business...

also without fleeting the impalas and what not, the vehicles are holding a much higher point of sale price...

172169[/snapback]

Fleet is up in terms of %. 29% YTD 2006 vs 25.1% YTD 2005. Most alarming is trucks, which are at 23.5% YTD 2006 vs 17.6% YTD 2005 (an increase of 33%). Fleet sales in Q2 were 28.1% 2006 vs 23.8% 2005 (an increase of 18%). As I originally suspected, and posted in another thread, GM is talking out the side of their mouth when they say fleet sales are down by talking about total units.

http://ccbn.10kwizard.com/xml/download.php...0511&format=PDF

Some other tidbits from the item linked above:

YTD market share US is down from 26.7 YTD 2005 to 24% YTD 2006. 14.3% to 13.5% worldwide in the same period.

So best case is that less than <15% (I am guessing) of GM's volume went up by up to 8K/vehicle. ~15% of GM's total volume would be cars that have a sale price of < 15K, so the most they could move on those might be ~3K. That means the remaining vehicles (70%) would have to be up ~12K/vehicle on average to make a 10K jump/vehicle overall. I don't believe it is possible. But I'm not sure if this is outright fraud or if there is some other way that they could make it happen using shady (but legal) accounting.

I'm not sure why some people are crooing over these results. I'm no financial expert, but it would seem that Rick is still pulling the wool over our eyes.

[VenSeattle]

Why is the increase in Truck Fleet sales surprising? I'd figure GM is getting rid of as many GMT800s as possible to make way for the GMT900 SUVs that are on sale now, and the Trucks that are about to debut.