GM is now less than a month away from its June 1 restructuring deadline imposed by President Obama’s auto industry task force, but any signs that it’s on the path to becoming viable may be a little hard to find considering the carmaker has just announced a $6 billion loss for the first quarter of 2009. Once again citing global economic pressures and low sales as the primary reasons for the loss, GM is using the result to highlight the importance of its most recent viability plan in turning around its fortunes.
"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 GM CEO Fritz Henderson. "It’s focused on taking care of customers every single day, winning with four core brands, and investing in new products and technology, while at the same time accelerating actions to lower our cost structure to return GM to profitability quickly."
The loss of $6 billion equates to roughly $9.78 per share and is down on the $3.3 billion loss for the same period one year ago. At the same time, revenues fell from $42.4 billion in the first quarter of 2008 to $22.4 billion this year. 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. However, industry wide sales saw a decline of almost 21% over the past year.
GM also said it burned through $10.2 billion in cash, while being supported by $13.4 billion in government funded loans in the quarter and an additional $2 billion since. By contrast, Ford only posted a $1.4 billion loss and mananged to increase its cash reserves from $13.4 billion to $21.3 billion.
The carmaker is now racing to beat its June 1 deadline to restructure and is in the process of selling its low-performance brands, including Hummer, Saturn and Saab, as well as attempting to secure deals with the UAW and bondholders to reduce its debt.
