North America drags down GM profits

General Motors Corp today reported a loss of $318 million, or $0.56 per diluted share, in the second quarter of 2005, excluding special items and a tax-rate adjustment. These results compare with net income of $1.4 billion, or $2.42 per share, in the second quarter of 2004.

Revenue was $48.5 billion, compared with $49.3 billion a year ago.

For the second quarter of 2005, GM reported a loss of $286 million, or $0.51 per share, including special items. The special items include a $126-million restructuring charge at GM Europe, and recognition of the recurring tax benefits above those reflected in the 15-percent rate used in GM's adjusted earnings. These items had a net favorable effect of $32 million, or $0.05 per share.

"Our second-quarter results reflect a mix of some important pluses and minuses," GM Chairman and Chief Executive Officer Rick Wagoner said. " On the positive side, sales were up in all regions and global market share increased as our new cars and trucks continued to gain traction and show strong customer acceptance. In addition, financial results were positive in four of our operating units, with GMAC and GM Latin America / Africa /Mid-East continuing their recent favorable performance and GM Europe and GM Asia Pacific showing significant improvement from the first quarter.

"GM North America's financial performance continued to be very disappointing. While the results reflect a significant reduction in U.S. dealer inventory, with second-quarter inventories down 349,000 units from mid-year 2004 and 224,000 units from the first quarter of 2005, they also re-emphasize the need for us to significantly improve our cost structure in all major areas – material costs, productivity, capacity utilization and especially health care."

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