- The Washington Times - Thursday, May 3, 2007

1:07 p.m.

DETROIT (AP) — General Motors Corp.’s first-quarter profit fell 90 percent from a year ago. The company cited losses in the home-lending operations of its former financial arm.

It was the second consecutive quarterly profit for the nation’s largest automaker, which said in today’s report it had record vehicle sales worldwide and improvements in its automotive operations in the latest quarter.

However, the profit of $62 million (11 cents a share) for the January-March period was down from $602 million ($1.06) a year ago.

Its earnings excluding one-time items fell short of Wall Street expectations, and its shares fell 4 percent in morning trading.

The company attributed the year-over-year decline to losses in the residential mortgage business of GMAC Financial Services. GM sold a 51 percent stake in GMAC to private equity investors last year but still owns a 49 percent stake in the business.

“We were able to expand vehicle sales and improve automotive profitability based on the progress in our turnaround initiatives in North America and Europe and our expansion strategy for key growth markets like China, Russia and South America,” said Chairman and Chief Executive Rick Wagoner.

“We continue to see progress on the automotive bottom line as we implement the strategies laid out two years ago.”

While the automaker’s North American performance improved, the company still lost an adjusted $85 million on its core operations, GM said. A year ago, the company reported an adjusted loss of $251 million in North America.

The company also reported $32 million of special items largely because of restructuring in its Europe and Asia Pacific divisions. Its results a year ago were also inflated by a one-time after-tax gain of $395 million because of the sale of its equity ownership of Suzuki Motors.

Excluding special items, GM’s net income was $94 million (17 cents) from net income of $350 million (62 cents) in the first quarter of 2006. GMAC, its former financial arm, lost $115 million.

First-quarter revenue was $43.9 billion, down 16 percent from $52.4 billion in the same period a year ago. GM said the decline was almost entirely because of GMAC revenue no longer being included in GM’s consolidated results.

Automotive revenue for the quarter was $42.9 billion, down from $43.6 billion in the first quarter of 2006.

Though automotive revenue slipped, the number of cars and trucks GM sold globally rose 3 percent to 2.26 million in the quarter.

Chief Financial Officer Fritz Henderson said the average transaction price per vehicle rose by about $1,000 year over year but GM had production cuts of 192,000 units in North America for the first quarter as it tried to reduce low-profit fleet sales and incentives.

“Clearly, being down 192,000 units is a big head wind,” Mr. Henderson said.

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