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GM posts $15.5 billion loss as sales sputter
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Monday, 4th August 2008
GM posts $15.5 billion loss as sales sputter
Kevin Krolicki and David Bailey, Reuters
The GM headquarters in Detroit, Michigan.
General Motors Corp. posted a $15.5 billion quarterly loss on Friday, as North American sales dropped by 20 per cent and plunging prices for SUVs prompted deep charges for its auto finance business.
GM shares tumbled six per cent in reaction to the automaker's announcement of the deeper-than-expected loss, the third-largest quarterly loss in its history.
The No. 1 US automaker fundamentals of multinational finance also burned class action lawsuit wilmington finance through $3.6 billion in cash in the quarter as it ran down inventory of slower-selling vehicles dc finance in its slumping home market.
GM's net loss was equal to poway honda finance $27.33 per share, daimler chrysler finance compared with a profit of $891 million, or $1.56 per share a year earlier, reflecting a sharp drop in demand for the light trucks that represent about 60 per cent of its sales.
GM took $9.1 billion in charges against second-quarter results, including $3.3 billion for buyouts of US factory workers, $2.8 billion for its exposure to bankrupt former parts unit Delphi Corp. and $1.6 billion to write down lease values.
Revenue fell to $38.2 billion from $46.7 billion a year earlier.
Excluding one-time items, GM posted seattle toyota finance a loss of $6.3 billion, or $11.21 per share. Analysts on average had forecast a loss on that basis of $2.67 per share, according to Reuters Estimates, and had looked for revenue of $42.36 billion.
GM ended the second quarter with $21 billion in cash and $5 billion in credit facilities. It said it had provided notice in July that it would draw down $1 billion under a secured revolving loan facility.
Chief financial officer Ray Young said GM's second-quarter cash position was slightly better than the automaker haircut finance had forecast, and added that GM was on track with a plan to free up $15 billion in liquidity through 2009 with a combination of cost-cutting, asset sales and new borrowing.
"Our vw finance focus is cash flow and liquidity. That is our focus," Mr Young said.
The struggling automaker's cash position awd home finance has become an increasing concern for investors and analysts, who have begun to wells fargo bank auto finance question whether and when GM's liquidity could fall below the levels needed to run its cash-hungry global operations.
Ratings agency Standard & Poor's on Thursday downgraded GM to "B-minus" citizen automotive finance and warned the lennox finance automaker was on track to burn through roughly $4 billion per quarter this year, sending GM bonds to a record low price.
After losses totalling $51 billion over the previous three years, and a $3.25 billion loss in the first quarter, GM faced a battery of problems in the second quarter, including a slide in US sales that sent its shares to a 54-year low.
GM's global auto sales dropped five per mba in finance starting salary cent and it lost $4 billion on its auto operations before charges in the second quarter securite auto finance as record gas prices sank demand for trucks and SUVs.
The automaker was also hit by some $2 billion in pre-tax losses from a strike by the United Auto Workers union at a key supplier and some of its own plant during the quarter.
Then the market what finance majors should know for financing leases on big SUVs collapsed, saddling both GM and its smaller rival Ford Motor Co. with large losses.
On finance rules political donations rules Thursday, flat iron finance company GMAC LLC, GM's former financing arm, finance park west palm beach was forced to write down ron paul campaign finance the value of GM's lease contracts because of the slumping value of the carmaker's big SUVs.
Under lease contracts, automakers and their finance companies rent vehicles to consumers and sell the used vehicles when the leases expire at wholesale personal and business finance class learn auctions.
But the collapse in demand for SUVs this year has been accompanied by a steep drop in their resale value as consumers flock to more fuel-efficient passenger cars.
The resulting drop in resale values on SUVs prompted a $717 million charge by GMAC and bigger subsidies by GM, which retains 49 per cent of the finance company after spinning off the remainder to Cerberus Capital Management.
GM said declining lease values at beneficial finance GMAC had depressed its second-quarter results by $2 billion.
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Article © Allied Newspapers Ltd., printed on Monday, August 4, 2008. This article is for personal use only, and should not be distributed.
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