GM posts weaker-than-expected quarterly profit, revenue
General Motors on Thursday delivered quarterly earnings and revenue that fell short of analysts' expectations. Weakness in South America and Russia hurt demand, and the company's tax rate came in higher than expected.
Shares of GM fell in premarket trading following the announcement. (Get the latest quote here.)
Net income in the first quarter rose to $945 million, or 56 cents a share, compared with $125 million, or 6 cents a share, a year earlier. Last year's results included charges related to recalls, including its defective ignition switches.
Excluding one-time items related to ending manufacturing in Russia and the compensation program related to the faulty switch, GM earned 86 cents a share. That was below the 97 cents analysts polled by Thomson Reuters had expected.
Revenue fell 4.5 percent to $35.7 billion, below the $37.6 billion analysts had expected. Weaker volume in Brazil and Russia hurt sales, as well as the impact of weakening currencies in South America due to the strong U.S. dollar. GM announced in March it would shut a Russian factory and wind down its Opel brand there due to slumping demand.
Chuck Stevens, GM's chief financial officer, attributed about half of the earnings miss to soft business in South America, where he said GM faced a more challenging environment than analysts expected.
The other half he chalked up to a higher effective tax rate, which he said GM expects to moderate later this year.
The company said Tuesday it sold 2.4 million in the first quarter of 2015, a 2 percent increase from the previous year. China sales also increased by 9 percent in the period, while North American deliveries rose 6 percent.
Stevens said GM believes its upcoming product launches will be "exceptionally strong" not only in North America, but in other key markets such as China and Europe.
"We're getting traction in Europe and we're really expecting to see revenue grow while we maintain our margins in China. So, consistent with our 2016 objectives, we believe there's significant earnings opportunities," he said in an interview on CNBC's "Squawk Box."
Nevertheless, the American automotive company's quarterly sales came up short against sales from its German counterpart Volkswagen, which sold 2.49 million vehicles in the same period.
GM also made headlines last week after a judge ruled it will not have to face dozens of lawsuits accusing it of concealing the ignition-switch defect that has been blamed for more than 200 deaths or serious injuries.
U.S. Bankruptcy Judge Robert Gerber said some drivers may assert claims against the automaker over its post-bankruptcy actions, but he declined to modify the bankruptcy plan of the old GM, which shielded it from suits related to prior actions.
The company's stock has recently outperformed rival automaker Ford Motor this year, as well as in the last three, six and 12 months.
—CNBC's Terri Cullen and Tom DiChristopher and Reuters contributed to this report.