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August 1, 2007
GMNA had adjusted net income from continuing operations of $78 million in the second quarter 2007 (reported net loss from continuing operations of $39 million), compared to adjusted net loss of $94 million from continuing operations (reported net loss from continuing operations of $3.95 billion) in the second quarter 2006. The net income improvements reflect favorable mix and reduced structural costs. These savings were partially offset by lower volume, favorable policy and warranty (P&W) adjustments in the prior-year period and unfavorable foreign exchange.
GM Europe (GME) posted adjusted net income of $236 million for the quarter (reported net income of $217 million), compared to $143 million in the second quarter of 2006 (reported net loss of $39 million). The results mark the best quarterly performance for GME since the second quarter of 1996. The improved earnings were driven by favorable pricing, combined with solid structural cost performance associated with the region’s ongoing restructuring.
Despite industry pressures in Germany, Europe’s largest vehicle market, GME set a quarterly sales record of 574,000 units, up five percent over the second quarter 2006. The new Opel Corsa small car and the Chevrolet Captiva compact SUV continued to perform especially well. In addition, GME’s multi-brand strategy continues to gain momentum. Chevrolet had record sales of 115,000 units, up 34 percent. GME growth in key Eastern European markets was strong, especially in Russia, where unit sales were up 106 percent over the second quarter 2006, and share was up 3.9 percentage points.
GM Asia Pacific (GMAP) recorded adjusted net income of $237 million in the second quarter (reported net income of $227 million), which marks a second-quarter net income record for the region, and compares with $164 million in the same quarter a year ago (reported net income of $376 million, which included $212 million from the sale of GM’s equity interest in Isuzu). The improvements were largely driven by strong performance at GM Daewoo and GM China. GM enjoyed eight percent sales growth in the Asia Pacific region, and GM China set a new volume record with 234,000 units in the quarter, up over six percent year-over-year. GM sales in South Korea were up 20 percent, and India was up 46 percent aided by the success of the newly-introduced Chevrolet Spark.
GM Latin America, Africa and Middle East (GMLAAM) continued to leverage explosive regional growth and its traditionally strong position in the region. GMLAAM posted its best quarterly net income in a decade with adjusted earnings of $213 million (reported net income also $213 million), compared to $155 million in the same quarter last year (reported net income of $139 million). Improvements in net income were driven primarily by volume growth and favorable pricing. GMLAAM set a volume record for the quarter, selling over 293,000 units, up 20 percent year-over-year. GM sales performance was highlighted by an all-time sales record in Venezuela, and second quarter records in Argentina, Brazil, Chile, Colombia, Egypt, and the Middle East Operations.
In addition to strong year-over-year performance in automotive operations, GM also recognized adjusted net income of $401 million in Corporate Other and Other Financing (reported net income of $27 million). This represents a $517 million improvement over the second quarter 2006, principally related to reductions in income tax contingencies.
As a standalone company, GMAC Financial Services reported net income of $293 million for the second quarter 2007, compared to $787 million in the second quarter 2006 which included a one-time gain on the sale of a regional homebuilder of $259 million. GM recognized $139 million in net income attributable to GMAC as a result of its 49 percent equity interest as well as accrued preferred dividends. Financial performance at GMAC represents a $598 million improvement over the first quarter 2007, which was significantly affected by pressures in the U.S. nonprime mortgage market.
“We’re pleased that GMAC returned to profitability in the second quarter, with significantly better results than the first quarter. GMAC’s auto financing and insurance businesses continues to post strong results while the company continues to progress in addressing the challenging conditions in the residential mortgage market,” Wagoner said.
GMAC's automotive finance, insurance and other operations (excluding Residential Capital, LLC (ResCap)) generated more than twice the net income of these same operations in the year-ago period. Despite continued challenges in the residential mortgage industry, ResCap significantly reduced losses in the second quarter.
August 1, 2007