General Motors logged an 86-percent drop in net income in the first quarter of 2014 to $125 million, no thanks several factors including the current recall crisis that started in February. GM posted $1.3 billion in recall-related costs and around $200 million in restructuring costs in on its European operations.
GM also posted $427 million in one-time pretax charge credited to currency fluctuations in Venezuela. GM, however, was able to avoid a loss that analysts had expected and even managed to post its 17th consecutive quarterly profit – thanks to higher transaction prices of its trucks.
GM’s pretax income – which includes recall costs but excludes one-time items – fell 74 percent to $466 million while its revenues surged 1 percent to $37.41 billion. GM chief executive Mary Barra said the setbacks in the first quarter are part of their business.
She told analysts during a conference call that GM’s overall progress has been “sure and steady.” GM CFO Chuck Stevens confirmed GM’s target of gaining market share in North America in 2014, despite a possible slump in demand as brought by the recalls.
Barra said, that “although it is early,” it seems that the recall had not has significant impact on GM sales. The US carmaker around 7 million vehicles in the quarter, around 2.6 million of which are for a faulty ignition switches tied to 13 deaths.
GM said in a quarterly filing today with the United States Securities and Exchange Commission that due to the recalls, the carmaker is the subject of “various inquiries, investigations, subpoenas and requests for information" from several government agencies, including the SEC.