General Motors' profit plunges after recall costs

Thursday 24 April 2014 14.50
General Motors's profits fall by 85% in Quarter 1
General Motors's profits fall by 85% in Quarter 1

General Motors' first-quarter profits plunged 85% it was reported today, after a series of vehicle recalls.

GM, the largest US car maker, posted net profit of $125m, dragged down by a $1.3 billion charge for recalling seven million vehicles worldwide.

The Detroit, Michigan-based company also took a $300m charge for restructuring costs, mostly in Europe, and had costs related to the exchange rate it uses for Venezuela's currency.

Earnings per share were six cents, down from 58 cents a year ago but beating Wall Street estimates of four cents.

Net revenue in the first quarter was $37.4 billion, up from $36.9 billion in the first quarter of 2013.

"The performance of our core operations was very strong this quarter, reflecting the positive response of customers to the new vehicles we are bringing to market," said GM chief executive Mary Barra in a statement.

GM faces a slew of investigations and lawsuits over its delayed recall of vehicles for an ignition switch problem that has been linked to 13 deaths and other injuries.

The ignition problem was detected at the pre-production stage as early as 2001, but the company waited until February this year to begin recalling the affected vehicles.