GM Q1 Underwhelms with $1.7 Billion Revenue Drop

AutoInformed.com

Worrisome declines in automotive operating and adjusted automotive cash flows were said to be due to one extra weekly payment cycle to suppliers.

General Motors Company (NYSE: GM) said Q1 income for common stockholders was $900 million, or $0.56 per diluted share on $35.7 billion net revenue, down from revenue of $37.4 million, but up from $0.06/share in the year earlier quarter. North America and GM Financial were the only divisions with solid operating results.

Earnings before interest and tax (EBIT) adjusted was $2.1 billion and included the impact of $100 million in restructuring costs. This compares to Q1 2014, when the GM recorded EBIT-adjusted of $500 million, which included safety recall-related pre-tax costs of $1.3 billion and $300 million in restructuring costs.

Once again, doubts were raised about GM’s ability anticipate and manage a global business. Q1 automotive cash flow from operating activities of $0.0 billion and adjusted automotive free cash flow of $(1.7) billion, were down from $2 billion and $200 million a year ago, respectively. These worrisome declines in automotive operating and adjusted automotive free cash flows were said to be due to one extra weekly payment cycle to suppliers during Q1 compared with the same quarter a year ago, and cash payments related to recalls and restructuring.

Nevertheless, Chuck Stevens, GM executive vice president and chief financial officer said, “We continue to take decisive actions to address issues head-on and to drive the company to generate strong results.”

Special Q1 charges included $400 million in Russia, and $100 million for an “adjustment” – apparently ongoing – to the estimated costs of the defective ignition switch payoffs to victims of the safety defect. The Russian market exit costs include employee separation and severance; Dealer terminations and contract cancellations; Inventory & other asset write-downs.

Since announcing its $5 billion common stock repurchase program in March to buy off dissident venture capital firms, GM has repurchased 19.4 million shares through April 21. Of this total, 10 million shares were repurchased through the March 31 trading date for approximately $400 million. GM paid common stock dividends of approximately $500 million to shareholders during Q1.

Segment Results
• GM North America reported EBIT-adjusted of $2.2 billion. This compares with EBIT-adjusted of $0.6 billion in the first quarter of 2014, which included the impact of a $1.3 billion pre-tax charge for recall costs.
• GM Europe reported EBIT-adjusted of $(0.2) billion. This compares with EBIT-adjusted of $(0.3) billion in the first quarter of 2014, which included
$0.2 billion for restructuring costs.
• GM International Operations reported EBIT-adjusted of $0.4 billion, compared with EBIT-adjusted of $0.3 billion in the first quarter of 2014.
• GM South America reported EBIT-adjusted of $(0.2) billion, approximately equal to the first quarter of 2014.
• GM Financial reported earnings before tax of $0.2 billion, matching its results for the first quarter of 2014.

About Kenneth Zino

Ken Zino is an auto industry veteran with global experience in print, broadcast and electronic media. He has auto testing, marketing, public relations and communications expertise garnered while working in Asia, Europe and the U.S.
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