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GM Posts a $14 billion Q2 Turnaround

Profits of $1.3 billion jump from $13 billion loss during the same period in 2009 when it was bankrupt as cost cutting takes hold.

by on Aug.12, 2010

Good enough progress for long enough to peddle the taxpayer owned stock?

General Motors Company today announced its second quarter 2010 results with revenue of $33.2 billion and net income attributable to common stockholders of $1.3 billion. This is about a $14 billion swing when compared to the loss of almost $13 billion in Q2 of 2009 when it was bankrupt. GM only survived because of lavish taxpayer subsidies from the Canadian and U.S. governments.

GM earnings per privately-held share on a diluted basis tallied at $2.55.  GM’s second quarter earnings before interest and tax (EBIT) was $2.0 billion.

Whether the results are good enough to engender private and institutional investor confidence in a pending IPO will be a matter of much debate today. Since the offering will be among the largest in history, its timing is crucial to acceptance.

“Yes, these are good enough results to get an IPO done,” said Joe Phillippi of the AutoTrends consultancy. Phillippi, who has written road show presentations for IPOs, noted that big questions remain around market conditions. “‘How many shares and at what price will private and institutional investors accept?” Phillippi said.

GM refused to comment on the IPO.

During the second quarter, GM vehicle production was up in all regions, totaling about 700,000 more vehicles at 2.3 million than the previous quarter. It estimated its global market share at 11.6%, with  share gains in every region.


Toyota Predicts Higher Profits This Year

Lost sales due to the recalls amounted to about 50,000 vehicles.

by on May.11, 2010

"I am sincerely grateful to our customers of more than 7 million people around the world who newly purchased Toyota vehicles.”

Toyota Motor Corporation said this morning in a statement that profits will rise 48% this fiscal year, as it boosts sales in Asia and recovers from record numbers of recalls.

Toyota made a net profit of 112.2 billion yen ($1.2 billion) in its fiscal fourth quarter compared to a net loss of 765.8 billion yen in the same period a year earlier.

The world’s largest automaker predicts that global sales will increase to 7.29 million units, up 53 thousand units from fiscal year 2010, in what appears to be an extremely conservative forecast.

TMC President Akio Toyoda said, “I am sincerely grateful to our dealers and suppliers who remained fully committed to providing as many cars as possible to customers, and to our employees as well as our overseas business operations for their efforts in working together so that the company will return to its normal state as soon as possible. And finally, above all, I am sincerely grateful to our customers of more than 7 million people around the world who newly purchased Toyota vehicles.”

Subject to the usual caveats, Toyota said net income would rise to 310 billion yen ($3.35 billion) in the fiscal year ending in March, up from 209 billion yen a year earlier. Toyota forecast exchange rates of 90 yen to the dollar and 125 yen to the euro, compared with an average 93 yen against the dollar and 131 yen against the euro last fiscal year.

In the critical U.S. market, Toyota’s sales rose 24% in April as record incentives increased demand for its fuel efficient Corolla and Prius models among others, while ameliorating  the impact of recalls of more than 8 million vehicles worldwide unintended acceleration safety defects. This is good news for buyers, as sales incentives will likely continue for some time.

Toyota predicts that North American sales will increase only 1.5% this fiscal year to 2.13 million vehicles. Toyota’s U.S. sales dropped 20% in 2009, when industry wide sales slumped 21% to 10.4 million units, the lowest level since 1982. However, Toyota and Lexus sales in the U.S. have been surging since March, when it introduced widespread and extensive sales incentives.


Q1 Porsche Sales Drop 40%, Revenue Declines 31%

Results still moving downward as "sports car" maker struggles.

by on Dec.19, 2009

The underlying financials at Porsche remain weak.

Underlying financials at Porsche remain weak as it is unable to counter Great Recession effects.

Sales of Porsche AG fell 40% in the first quarter of fiscal year 2009/2010 as only 11,385 vehicles were sold.

The Panamera sedan during the first few months of introduction sold 2,973 vehicles, making it the second most popular vehicle in the line after the Cayenne sport utility vehicle, which tallied 4,095, down 57% from the year earlier period.

Thus, the fabled sports and race car maker is now largely a sedan and truck company by volume.



In the period from 1 August 2009 to 31 October 2009, sales of the 911 dropped 64% to 2,600 vehicles. Sales of vehicles from the Boxster model series, including Cayman, dropped 13.5% to 1,717 vehicles.


Tata Motors Ekes Out Q2 Profit

Jaguar Land Rover Surprises Analysts with Black Ink.

by on Nov.30, 2009


Tata said the JLR business is witnessing “some stability” in key markets.

Tata Motors has reported a consolidated operating profit for the quarter ending September 30, 2009 of 218 million rupees ($4.7 million).

India’s largest auto company saw a revival in its home market and improvements at its Jaguar Land Rover subsidiary.

The turnaround, from a loss of 9.42 billion rupees in the same July-to-September period last year, was good news for the world’s fourth largest truck manufacturer, and the world’s second largest bus manufacturer.

Tata earnings had been hit hard after its takeover of JLR from Ford Motor Company in June of last year just before the ongoing global Great Recession took hold. Analysts had feared that the buy would hurt the company for years to come, a prospect that remains.

Tata said the highlight of the quarter was that the JLR business posted an operating profit of £41.29 million (Rs. 325.27 crores), supported by a 23% growth of wholesale volumes compared to the previous quarter, as well as aggressive cost reduction efforts.

Mumbai Musings!

Mumbai Musings!

Tata said the JLR business is witnessing “some stability” in the external environment with certain key markets showing signs of recovery. The new products launched by the business in the current year, the upgraded Range Rover, Range Rover Sport and Discovery 4, continue to receive “strong market reception.”


Toyota Posts Loss of $1.5 Billion for First Half

Vehicle sales dropped more than one million units. Full year loss of $4 billion predicted despite cost cutting and plant closings.

by on Nov.05, 2009


Production cuts and revenue loss outrun efficiency measures.

Toyota Motor Corporation (TMC) today announced financial results for the six months ended September 30, 2009 in Tokyo. On a consolidated basis, the net revenues for the first half of the fiscal year totaled 8.378 trillion yen, ~$93 billion, a decrease of 31% compared to the same period last fiscal year.

Operating income decreased from 582.0 billion yen to a loss of 136.9 billion yen, ~$1.5 billion, while income before income taxes and equity in earnings of affiliated companies was a loss of 63.0 billion yen. Net income decreased from 493.4 billion yen to a loss of 56.0 billion yen or $620 million, which is a swing negative of more than $6 billion.

Operating income, compared to the same period last fiscal year, decreased by 718.9 billion yen or almost $8 billion. Major factors contributing to the decline include 910.0 billion yen due to the effects of sales volume and mix and 320.0 billion yen due to the appreciation of the Japanese yen against the U.S. dollar and the Euro, which overrode the positive impact of our reduction in fixed costs and cost reduction efforts,” the company said in a statement.

As part of its ongoing cost cutting to stem  the flow of red ink, Toyota announced it is withdrawing from Formula One Racing, following a withdrawal by Honda last year, and BMW this year.


Volkswagen Group Q3 Results Down 86%

Germany's largest automaker is struggling with profitability.

by on Oct.29, 2009

Head of Group Design Walter de Silva, left, describes his design philosophy of “Simplicity and character, esthetics and precision” to Dr. Martin Winterkorn, Chairman of Volkswagen Board of Management, right.

Walter de Silva, left, describes his design philosophy of Simplicity to Dr. Martin Winterkorn, Chairman of Volkswagen Board of Management.

Volkswagen Group AG reported a third-quarter after tax profit decline of 86% compared to the year earlier period, as vehicle prices dropped and revenue fell 10%. Net income was €172 million ($255 million), or 43 cents a share, compared €1.21 billion or €3.02 a share a year earlier.

The largest automaker in Europe reported an operating profit of €1.5 billion in the first nine months of this year compared to January – September 2008 profits of €4.9 billion. For Q3, profit was €1.61 million, compared to €1.16 billion a year earlier.

As of September, the Automotive Division’s net cash flow improved to €5.1 billion compared to -€0.1 billion in the year earlier period.

“The Volkswagen Group is holding its own extremely well despite the adverse conditions. While the global market is contracting by 12%, we are recording stable delivery levels. This proves that – even in difficult times – we are well positioned with our multi-brand strategy,” said Dr. Martin Winterkorn, Chairman of Volkswagen Board of Management.


Magna International Q2 Loss at $205 Million

Would be purchaser of Opel hit hard by declines at automakers.

by on Aug.07, 2009


Total sales are off 45%.

Magna International Inc. (TSX: MG.A; NYSE: MGA) today reported that it lost U.S. $205 million in the second quarter and $467 million in the first half of 2009 as sales to major automaker clients plummeted.

The Canadian-based conglomerate, with 71,000 employees in 247 manufacturing operations and 86 product development and engineering centers in 25 countries, is an excellent barometer of the auto industry.

During the second quarter of 2009, vehicle production declined 49% to 1.8 million units in North America and 28% to 3.1 million units in Europe, each compared to the second quarter of 2008.

Also during the second quarter of 2009, Magna’s North American and European average dollar content per vehicle decreased 10% and 7% respectively, each compared to the second quarter of 2008.

Complete vehicle assembly sales by Magna decreased 60% to $423 million for the second quarter of 2009 compared to $1.1 billion for the second quarter of 2008, while complete vehicle assembly volumes declined 65% to approximately 14,100 units.

As a result of the “significant declines in vehicle production in North America and Europe, lower average dollar content per vehicle in these two markets, and decreases in assembly sales and tooling, engineering and other sales,” Magna’s total sales decreased 45% to $3.7 billion for the second quarter of 2009 as compared to $6.7 billion for the second quarter of 2008. 

Magna International Q2 2009


Three Months Ended June 30,

Six Months Ended June 30,

2009 2008 2009 2008
Sales $3,705 $6,713 $7,279 $13,335
Operating (loss) income  $(237) $319 $(467) $605
Net (loss) income $(205) $227 $(405) $434
Diluted (loss) earnings per share $(1.83) $1.98 $(3.62) $3.75
All results are reported in millions of U.S. dollars, except per share


General Aviation Shipments Down In First Quarter

Overall manufacturing decline is affecting broad segments of the economy, cutting high-paying jobs.

by on May.11, 2009

Cessna Citation Mustang

Estimates show that 15,000 high-paying jobs were lost in the U.S. during the past several months.

The ability of manufacturing to create wealth and high-paying jobs continues to be hampered by the global Great Recession. The latest evidence of how badly the economic crisis is affecting living standards comes from the very industry that supplies the titans of industry who brought on the crisis in the first place. Aviation might sell to multi-millionaires, but it largely employs skilled, middle class American workers, an increasingly threatened but highly productive group.

The General Aviation Manufacturers Association (GAMA) said that in the first three months of 2009 deliveries of general aviation airplanes totaled 462 units, a 41% drop from the same period last year, with industry billings falling 18.2% to $4.34 billion.

This is roughly the same decline that automakers are facing, but in general aviation, a category that excludes the largest airliners and military planes, the production numbers are much smaller, and the sales prices much higher. So just 462 units, or the output of  one shift of a GM final assembly plant, translates into a billion dollar hit, perhaps not much by Washington’s standards but real money for people struggling in the real economy.

Industry estimates show that 15,000 good jobs evaporated in the U.S. during the past several months as such historic companies as Cessna, Mooney, Piper and Gulfstream grappled with the ongoing crisis. Cessna Aircraft Company in Kansas is the world’s largest manufacturer of general aviation airplanes. In 2008, Cessna delivered 1,301 aircraft, including a market-leading 467 Citation business jets, while reporting revenues of about $5.6 billion. Cessna has a backlog of $13 billion as of March 31, 2009, but it too has been laying off workers since last November, cutting about 6,000 of 15,000 employees, as sales dwindle and it reorganizes.    (more…)

GM Bankruptcy, Once Unthinkable, Now Seems Absolutely Unavoidable

Over the past four years, GM has tried all kinds of strategies to keep the wolf from the door. It has now been blown away.

by on May.07, 2009

Ray Young and Company Employees Close New York Stock Exchange

"Once you start losing revenues, you get into a vicious cycle that you can't get out of very easily."

General Motor lost money again in the first quarter of 2009 , and is just as certain to lose money again in the second quarter, given the company’s deep cuts in production now in the schedule.

Bankruptcy, once unthinkable, seems unavoidable in the wake of the $6 billion first-quarter loss — and a $10 billion cash burn — which only exacerbated the company’s already precarious financial situation. Worse, the company revenues plunged by nearly 50% in the first 90 days of this year, suggesting that the Obama Administration’s Auto Task Force really did have cause for recommending the dismissal of former GM chairman Rick Wagoner.

“Once you start losing revenues, you get into a vicious cycle that you can’t get out of very easily,” observed Ray Young, the company’s youthful chief financial officer who was plucked off the finance staff last summer to help guide GM through the grave and grave-digging crisis it is now facing.

Young also outlined another of GM’s serious problems. The drumbeat of bad news is drowning the company. “A lot of impact is already in the marketplace. We have anecdotal evidence that that spills over into places like Brazil. We can’t quantify the bankruptcy concerns, but there is an impact. If we have to go through a court process, it’s going to have to be quick,” he said.

Subscribe to TheDetroitBureau.comThe clear implication was that a long stay in bankruptcy court could very destructive to the company’s health. Perhaps any stay is fatal.  GM needs to get customers to focus on the company’s products, not the bad news, Young said during a conference call with reporters and analysts. How GM can do that, given the lack of significant new products and the plentiful supply of bad news is not at all clear, to put it kindly.    (more…)