DETROIT – A $1.3 billion pre-tax recall charge to fund the Chevrolet Cobalt/Saturn Ion ignition switch flaw and $0.3 billion in restructuring costs reduced General Motors’ profit to a wafer-thin $0.1 billion for the first quarter of 2014. This compares with a First Quarter 2013 net profit of $0.9 billion.
Revenues were up for the quarter, from $36.9 billion in Q1 of 2013 to $37.4 billion in Q1 of 2014. Earnings per share fell to six cents per diluted share from fifty-eight cents per diluted share. In addition to charging costs of the Cobalt and related products recall in the first quarter, which is expected to take until October to complete, GM posted a special item against its earnings before taxes to adjust the exchange rate it uses for the net assets of its Venezuelan subsidiaries. Adjusted earnings before income tax (EBIT) was $0.5 billion, off from $1.8 billion for the first quarter a year ago.
GM Europe’s EBIT was -$0.3 billion, versus -$0.2 billion for the first quarter of 2013, while GM International Operations totaled $0.3 billion compared with $0.5 billion, and GM South America was up by $0.2 billion, to $0.2 billion from even a year ago. GM says it ended the quarter with a healthy $37.4 billion in liquidity.
Despite the charge against EBIT for the recalls, GM’s quarterly results were better than expected. Analysts had expected GM to post its first net loss in four years. After posting the 86-percent fall in quarterly net profit, GM common stock was up 2 percent in early off-hours trading.