General Motors Corp on Tuesday posted a first-quarter net loss of $1.10 billion, its worst results since the industrial icon skirted bankruptcy in 1992, due to weaker US sales and growing costs for employee health care and goods to build cars. The world's largest automaker, which alarmed the markets last month when its slashed its outlook, said its automotive operations lost $1.98 billion in the quarter, with a loss in North America alone of $1.56 billion.
The automaker also said it would not provide an earnings forecast for the 2005 calendar year. Last month, GM cut its outlook for the year to a profit in the range of $1 to $2 per share, and analysts expect GM to earn a profit of 61 cents per share this year, according to Reuters Estimates.
GM said the first-quarter loss amounted to $1.91 per share and included several one-time items. In the first quarter last year, GM earned a profit of $1.2 billion, or $2.12 per share.
The loss was the biggest since GM lost $21 billion in the first quarter of 1992, when changes in accounting procedures required companies to include health-care costs in earnings.
GM shares eased 34 cents, or 1.3 percent, to $25.85 in early trading on the New York Stock Exchange.
"We need to accelerate our efforts on the challenging US health-care situation," GM Chief Executive Rick Wagoner said in a statement.
GM's total sales and revenue slipped to $45.77 billion from $47.83 billion in the year-ago quarter.
Wagoner, who has said that GM's health-care costs will rise to $5.6 billion this year from $5.2 billion last year, last week met with leaders of the UAW union to brief them about the challenges facing the automaker.
The Detroit automaker sent shivers through the markets last month when it cut its earnings outlook to a loss of $1.50 per share, down sharply from a previous forecast of break-even or better.
The earnings warning sent GM shares down to their lowest level in more than a decade and spurred debt ratings agencies to warn that they could downgrade GM's bond ratings to "junk" status at any time.
Ford Motor Co, scheduled to release its quarterly results on Wednesday, chopped its 2005 earnings forecast earlier in April, the second time in less than a month that the third-largest automaker revised its outlook, due to weaker sales and soaring costs.
Excluding one-time items, GM posted a first-quarter loss of $1.48 per share. On that basis, analysts had expected GM to lose $1.50 per share, according to Reuters Estimates.
The one-time items included a restructuring of GM's European operations, where the automaker offered buyouts of up to 12,000 jobs, and the costs of idling a vehicle assembly plant in Michigan.
In GM's automotive operations, cash and cash equivalents on hand dropped to $10.2 billion at the end of the first quarter from $13.15 billion at the end of 2004.
The automaker has said that it expects negative cash flow for its automotive operations of $2 billion this year, with a steep outflow in the first quarter. J.P. Morgan's Patel said that GM's cash flow for its auto unit could improve by year-end.
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