- The Washington Times - Wednesday, July 26, 2006

DETROIT (AP) — General Motors said yesterday it lost $3.2 billion in the second quarter as it absorbed heavy charges for its massive restructuring program. But the world’s largest automaker reported an adjusted profit without the charges that handily beat estimates, and its sales surged 12 percent.

The loss of $5.62 per share in the April-June period was compared with a loss of $987 million, or $1.75 per share, for the same period last year.

Without the one-time charges, GM said it earned $1.2 billion, or $2.03 per share. That was significantly ahead of the 55 cents per share average estimate.

Revenue climbed to $54.4 billion, compared with $48.5 billion a year ago.

“We’re particularly pleased with the speed with which our people have implemented our turnaround plan. Conventional wisdom is that you can’t turn a ship as big as GM around quickly. We aim to prove that conventional wisdom wrong,” GM chief Rick Wagoner said.

Mr. Wagoner said the company had increased its target for reducing annual costs in North America to $9 billion from $8 billion this year, with $6 billion of that savings achieved in 2006, instead of a previously expected $5 billion.

“Our turnaround has not just gained traction, it’s accelerating into high gear,” he said. “While significant work still remains, our ability to identify and initiate $9 billion in cost cuts over the course of the past year is unprecedented in this industry.”

The second-quarter loss included a total of $4.3 billion in special charges, including a $3.7 billion after-tax charge related to buyouts and early retirements, which allowed GM to reduce its hourly work force by 34,400. One-time items also included a loss related to the pending sale of a 51 percent stake in finance arm GMAC, a gain on the disposition of Isuzu stock and other restructuring charges.

In North America, excluding special items, GM lost $85 million, a $1.1 billion improvement over the second quarter of 2005.

Mr. Wagoner acknowledged in his statement that beyond cutting costs, GM must do better at selling vehicles in North America. He said the company’s newer products, including full-size SUVs, the Chevrolet Impala and HHR, and the Pontiac G6, were doing well.

to grow our business, and we’re encouraged by the recent success of our newest vehicles, particularly in the U.S. market,” Mr. Wagoner said. “Our newly launched vehicles will account for about 30 percent of our U.S. retail sales this year and grow to 40 percent next year.”

General Motors Corp. rose $1.34, or 4.4 percent, to $32. It has traded in a 52-week range of $18.33 to $37.57.

Chief Financial Officer Frederick “Fritz” Henderson characterized the quarter as one of “good, solid progress,” driven largely by cost savings, although GM is expecting most of its cost reductions to take effect in the second half of the year.

GM, which lost $10.6 billion last year, started a major restructuring in November that called for closing 12 plants by 2008, slashing its work force and cutting structural costs by $4 billion this year.

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