Major reversal for General Motors

GENERAL MOTORS, the world’s largest carmaker, yesterday said it lost $1.1 billion (€800m) in the first quarter, clobbered by rising healthcare costs, lukewarm response to some new models and special charges.

The loss at its worldwide automotive operations more than doubled to $1.3bn, most of it in North America.

It was GM’s steepest quarterly deficit since the first quarter of 1992, when it reported a $21bn loss primarily because of changes in accounting procedures for retiree healthcare costs.

The January-March result amounted to a loss of $1.95 per share, compared with earnings of $1.3bn, or $2.25 a share, in the year-ago quarter, when the company benefited handsomely from its finance arm and improved business in Asia.

GM said its revenue fell 4.3% to $45.8bn (€35bn) from $47.8bn a year ago. Excluding special charges, GM said first-quarter earnings amounted to a loss of $839m, or $1.48 a share, compared with net income of $1.2bn, or $2.12 a share, in the first quarter of 2004.

The most-recent result was in line with Wall Street expectations for a loss of $1.49 per share, according to Thomson Financial.

Detroit-based GM warned investors in March that its first-quarter earnings would be below previous estimates of break-even or better. It has said it expects income of $1 to $2 per share for the full year, down from a previous guidance of $4 to $5.

GM sales in the United States, its largest and most competitive market, sank 4% for the first three months of 2005 from a year ago. For the same period, its US market share slipped to 25.6% from roughly 27%, according research firm to Autodata Corp. Its shares have plunged recently.