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General Motors Loses $6 billion in First Quarter

Worse, the ailing automaker burns another $10 billion in cash.

by on May.07, 2009

Not much to smile about for GM CEO Fritz Henderson. The automaker posted another $6 billion loss for the first quarter of 2009.

Nothing to smile about for Fritz Henderson as GM posted a $6 billion loss, and shares traded at $1.66.

General Motors Corporation reported a huge net loss of $6.0 billion this morning, including special items, which translates to -$9.78 per share in the first quarter of 2009. This compares with a reported net loss of $3.3 billion, or -$5.80 per share, in the year-ago quarter. 

Excluding special items, the company reported an adjusted net loss of $5.9 billion, or -$9.66 per share, in the first quarter of 2009 compared to an adjusted net loss of $381 million, or -$0.67 per share, in the first quarter of 2008.

The company said a worldwide decline in industry sales of 21% was responsible for the sea of red ink. However GM production declined at roughly twice that rate.

GM’s revenue for the first quarter of 2009 was $22.4 billion, down 47% from $42.4 billion in the year-ago quarter. The drop in revenue was primarily due to GM’s production volume decline of 903,000 units, or approximately 40%, on a global basis year-over-year.

The company said the losses were partially offset by cost cutting. However, GM continues to run through cash at a non-sustainable rate, hemorrhaging $10.2 billion in Q1. alone. Without government financing, GM would be history by now. And its future is by no means assured.

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Cash and marketable securities totaled $11.6 billion on March 31, 2009, down from $14.2 billion on December 31, 2008. The change in liquidity from the negative operating cash flow in the first quarter of 2009 was partially offset by U.S. TARP funding. Further details on GM’s current liquidity position and outlook will be disclosed in a Form 10-Q filing with the Securities and Exchange in the coming day. Surely, the news here will not be good.

“Our first quarter results underscore the importance of executing GM’s revised Viability Plan, which goes further and faster to lower our break-even point,” said Fritz Henderson, president and chief executive officer.  The failing automaker desperately needs to get out of the headlines as saturation coverage is clearly driving away potential buyers. (more…)

Fiat Reports First Quarter Loss of $536 million

Proposed savior of Chrysler is facing its own sales and profitability challenges.

by on Apr.23, 2009

TK

While the core Fiat brand strategy is ecologically sound, the sales decline calls into question the demand and profitability of green automobiles

While the Auto Task Force of President Obama has endorsed a takeover of Chrysler LLC by Italian carmaker Fiat, the group’s own first quarter results call into question the health of one of Europe’s leading small car makers.

Fiat SpA in Turin this morning reported a Q1 loss of €410 million ($536 million) even as it was claiming that it can still be profitable for the year, estimating a €1 billion return. The loss, which compared with a profit of €405 million a year earlier, comes as the restructuring negotiations between Chrysler and its secured debtors and unions face an April 30th deadline, with no resolution in sight. Fiat also has almost $9 billion in debt, excluding financial services.

Yesterday, the U.S. Treasury Department immediately and publicly turned down the latest offer by banks and bondholders to convert only a small portion of Chrysler’s debt in return for a 40% stake in the company. Chrysler said, “We continue to work around the clock” to obtain an agreement that meets the requirements of the U.S. and Canadian governments for continued taxpayer financing instead of liquidation.

Fiat’s loss, the first since 2004, was caused by declining sales of its cars and trucks of -25%. Fiat Automobiles is one of Europe’s ten best-selling automotive brands, and in 2007 and 2008 it had the lowest average value for CO2 emissions from its vehicles. The company also produces Alfa-Romeo, Lancia, and Iveco trucks. Results for Maserati and Ferrari car brands are not included in the Group’s reporting.

While the core Fiat brand strategy is ecologically sound, the sales decline also calls into question the demand and profitability of green automobiles in times of economic crisis. Fiat is Europe’s leader in the production of compact vehicles, and Chrysler recently showed its 500 model at a press conference during the New York International Auto Show. The small 500 and the larger Bravo models introduced Euro 5 complaint petrol and diesel engines ahead of competitors. By the end of 2009, most engines in the FIAT range will will comply with Euro 5 standards. This places it ahead of competitors, according to Fiat. (more…)