GM Posts 2nd Quarter Loss of $3.2 Billion

DETROIT — General Motors Corp. lost $3.2 billion in the second quarter because of heavy charges for layoffs and early retirements — part of its massive restructuring program. But, without those charges, the world’s largest automaker scored a profit that blew Wall Street away and bolstered management’s claim that the turnaround is working.GM shares rose $1.34, or 4.4%, to close at $32 on the New York Stock Exchange. They have traded in a 52-week range of $18.33 to $37.57.The loss of $5.62 a share in the April-June period compared with a loss of $987 million, or $1.75 a share, for the same period last year.Without one-time items, GM said it earned $1.2 billion, or $2.03 a share. That was significantly ahead of the 55 cents a share forecast in a survey of Thomso n Financial analysts.Revenue climbed to $54.4 billion, compared with $48.5 billion in the second quarter of 2005.In North America, excluding special items, GM lost $85 million — $1.1 billion less than it lost in the second quarter of 2005.“Conventional wisdom is that you can’t turn a ship as big as GM around quickly,” the chairman and chief executive of GM, Rick Wagoner, said in a statement. “We aim to prove that conventional wisdom wrong.”GM, which lost $10.6 billion last year, launched a major restructuring in November that called for closing 12 plants by 2008 and slashing its work force and structural costs. In recent months it has logged several milestones in the turnaround, including a deal with the United Auto Workers that reduced health care costs and an extensive program of early retirements and buyouts, under which 34,400 hourly workers left.The cost of the retirement and buyout program accounted for $3.7 billion out of $4.3 billion in special charges that GM took in the second quarter.The chief financial officer, Frederick “Fritz” Henderson, characterized the quarter as one of “good, solid progress,” driven largely by cost savings — even though GM is expecting most of its cost reductions to take effect in the second half of the year.“We gotta keep making progress on the revenue side to get the business turned around,” he told reporters at GM’s Detroit headquarters.Mr. Wagoner said yesterday the company had increased its target for reducing annual costs in North America to $9 billion from $8 billion this year. Some $6 billion of that will affect the bottom line in 2006, instead of a previously expected $5 billion.Mr. Henderson said much of the savings came from lower warranty costs, which he attributed to quality improvements.Sales volumes in North America were flat, but per-vehicle revenue increased because more of the vehicles sold were high-margin sport utility vehicles, Mr. Henderson said. GM launched a refreshed lineup of full-size SUVs this year.“The Yukon, Yukon Denali, Escalade, Tahoe, Suburban, Avalanche — we love them,” Mr. Henderson said.”So do customers. That’s even more important.”That message contrasted with last week’s earnings report from rival Ford Motor Co., which attributed its $123 million second-quarter loss to the market’s rapid shift away from trucks and SUVs because of high gas prices.

GM Posts 2nd Quarter Loss of $3.2 Billion

GM Posts 2nd Quarter Loss of $3.2 Billion

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