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GM profit plunges after recall costs

Last Updated: Thursday, April 24, 2014 - 19:25

New York: General Motors, the largest US automaker, on Thursday reported first-quarter profits plunged 85 percent after a series of vehicle recalls.

GM posted net profit of USD 125 million, dragged down by a USD 1.3 billion charge for recalling seven million vehicles worldwide.

The Detroit, Michigan-based company also took a USD 300 million charge for restructuring costs, mostly in Europe, and had costs related to the exchange rate it uses for Venezuela`s currency.

Earnings per share were six cents, down from 58 cents a year ago but beating Wall Street estimates of four cents.

Net revenue in the first quarter was USD 37.4 billion, up from USD 36.9 billion in the first quarter of 2013.

"The performance of our core operations was very strong this quarter, reflecting the positive response of customers to the new vehicles we are bringing to market," said GM chief executive Mary Barra in a statement.

"Our focus remains on creating the world`s best vehicles with the highest levels of safety, quality and customer service, while aggressively addressing our business opportunities and challenges globally," said Barra, who became CEO in January.

GM faces a slew of investigations and lawsuits over its delayed recall of vehicles for an ignition switch problem that has been linked to 13 deaths and other injuries.

The ignition problem was detected at the pre-production stage as early as 2001, but the company waited until February this year to begin recalling the affected vehicles.

Shares in GM were up 2.9 percent to USD 35.40 in pre-market trade on the New York Stock Exchange.

First Published: Thursday, April 24, 2014 - 19:25
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