General Motors Corp. on Wednesday posted higher quarterly earnings, boosted by record results from its credit arm and stronger profits from its core automotive business.
GM's second-quarter earnings, at the high end of Wall Street forecasts, rose to $1.34 billion, or $2.36 per share, up from $901 million, or $1.58 per share in the year-ago quarter.
The Detroit automaker reconfirmed its earnings projection for 2004, but set a target for the third quarter that was below most analysts' estimates.
GM and cross-town rival Ford Motor Co. suffered double-digit drops in U.S. sales in June, which prompted them to boost their costly incentives to higher levels and raised concerns that they might have to cut production to reduce inventories of unsold vehicles.
GM's North American automotive operations posted stronger results, but the automaker said it was disappointed with the overall figures.
"While earnings at GM North America improved, overall sales, market share and financial results were well below our expectations," GM Chief Executive Rick Wagoner said in a release.
Analysts had expected GM to post second-quarter earnings between $2.00 to $2.45 per share, with an average estimate of $2.20 per share, according to Reuters Estimates.
Last month, GM reconfirmed its second-quarter earnings target of $2.00 to $2.25 per share, excluding any one-time items.
General Motors' bonds performed better relative to Treasuries after the earnings report.
Spreads over Treasuries -- or the extra yield investors demand for taking a company's credit risk -- on General Motors Acceptance Corp. notes with a 5.625 percent coupon maturing in 2009 fell 0.03 percentage points to 1.85 percentage points, according to MarketAxess.
GM said on Wednesday that it expects to earn between 75 cents and $1.00 per share in the third quarter, below most analyst projections. Analysts on average had expected the automaker to earn 98 cents, according to Reuters Estimates.
GM's global automotive earnings rose to $529 million in the second quarter, up from $140 million in the year-ago quarter, with stronger results in all regions except Europe.
Profits from GM's North American automotive operations rose to $328 million, up from $83 million in the second quarter last year, despite a drop in its U.S. market share. GM said it expects U.S. vehicle sales for the industry to total about 17.2 million this year, up slightly from 2003.
GM's sales rose to $49.15 billion in the second quarter from $45.88 billion previously.
The Detroit automaker on Wednesday affirmed its earnings outlook for 2004 of $7.00 per share. In June, GM said it was on track to meet its 2004 earnings target of $7.00 per share, excluding one-time items.
