General Motors Co., after losing more than $18 billion in Europe since 1999, narrowed its first-quarter loss in the region, outpacing Ford Motor Co. and helping the automaker beat analysts’ earnings estimates.
GM’s European adjusted loss before interest and taxes was $175 million, compared with $294 million a year earlier, as the region’s economic slump continued to roil sales, according to a statement Thursday from the Detroit-based automaker. Companywide profit excluding one-time items was 67 cents a share, exceeding the 54-cent average of 16 estimates compiled by Bloomberg.
The Europe results suggest that GM’s cost cuts are starting to offset declining industrywide sales, which are heading toward 20-year lows. The largest U.S. automaker in the fourth quarter took a $5.2 billion writedown of European assets to reflect the tougher conditions, forecasting that the reductions would boost 2013 results by $600 million. GM also has new models such as the Opel Adam subcompact and Mokka sport-utility vehicle.
“The results that you see in the first quarter are a function of us executing” the European plan, Chief Financial Officer Dan Ammann told reporters in Detroit. “Obviously there are things that we control and we feel quite good about the progress we’re making on those. There are things we don’t control, such as the European macroeconomic environment.”
Ford lost $462 million in Europe last quarter and in January widened the forecast for its full-year deficit in the region to about $2 billion. Before the revised forecast, Peter Nesvold, a Jefferies Group analyst, had said Ford would be about a year ahead of GM in revamping European operations.
GM’s first-quarter European loss was better than the lost estimate of $432 million, the average of three analysts surveyed by Bloomberg.
“Probably too early to call a bottom in Europe and would expect some variability quarter-to-quarter, but the better than expected results will be well-received, giving investors confidence that progress is being made and break-even by mid-decade is possible,” Joseph Spak, an industry analyst with RBC Capital Markets LLC, said in a note to investors.
GM’s first-quarter net income fell to $1.18 billion, from $1.32 billion a year earlier. Revenue was $36.9 billion, beating the $36.6 billion average of eight analysts’ estimates.
Profit in North America before interest and taxes slipped to $1.41 billion from $1.64 billion a year earlier.
Chief Executive Officer Dan Akerson is pushing GM to achieve several mid-decade goals, including breaking even in Europe, increasing China sales to 5 million from 2.84 million last year and boosting North American operating margins to 10 percent from the average of 7.4 percent during the past three years.
GM is rolling out about 20 new or refreshed vehicles in the U.S. this year after its product lineup had grown stale since the company’s 2009 bankruptcy. The automaker is seeking to rebound from a 2012 market-share drop to an 88-year low.
The company’s U.S. vehicle sales rose 9.3 percent in the first quarter, outpacing the industry’s 6.4 percent gain, according to researcher Autodata Corp. Deliveries were helped by a 21 percent combined gain for the Chevrolet Silverado and GMC Sierra, as GM boosted incentives on the pickups to clear dealer lots for new trucks arriving this quarter.
In North America, including Lordstown where its Chevrolet Cruze is assembled, GM has said the benefits of its new products won’t start to show until the second half of this year.