GM disappoints as Europe and South America reverse

General Motors fell short of expectations with a first quarter result of just $945m, after losses in Europe and South America outweighed the effects of a boost in light trucks sales in North America.

The results included write-offs of $337m to end manufacturing in Russia and a further $150m in new charges for the company's bungled handling of an ignition switch fault.

Shares in the company fell about 2.5 per cent in premarket trading to $36.30.

Diluted earnings per share for the quarter were 56 cents, against 6 cents for the same quarter last year. Excluding special items, they were 86 cents, against analysts' consensus estimate of 97 cents at that level.

The results were also depressed by a $239m loss in earnings before interest and tax adjusted for special items (adjusted ebit) in Europe, only slightly down from the $284m loss at the same level in the first quarter last year. Ebit-adjusted losses in South America deepened to $214m, from $156m.

Nevertheless, Chuck Stevens, chief financial officer, told reporters the company was "very much on plan" in its efforts to improve profitability across the business. Those plans include achieving adjusted ebit margins in North America of 10 per cent by next year. North American margins had been running at better than 9 per cent in the quarter, Mr Stevens said.

"We think we're very much on track for our 2016 objective of 10 per cent margins," Mr Stevens said.

GM announced in March that it was indefinitely halting manufacturing of its vehicles in St Petersburg, in Russia, and withdrawing its European Opel brand from the market. The company's business there had suffered acutely from the weakness of the Russian rouble because so many of the components used there were imported.

The ignition switch costs reflect the continued costs to GM of recalling and repairing vehicles fitted with faulty ignition switches that can shift from "run" to "accessory" while the vehicle is being operated, as well as compensating victims. An independent scheme to compensate those affected has so far agreed to compensate the families of 87 people who died because of the fault.

The write-offs and losses in some international markets obscured strong performance in North America, where Mr Stevens said that strong sales of sports utility vehicles and pick-up trucks - collectively known as light trucks - produced a $500m boost to operating profits.

Sales of light trucks, which are disproportionately profitable for automakers, have grown particularly strongly since oil prices started falling last year. GM North America's adjusted ebit surged to $2.18bn, from $557m last time, on sales up 1 per cent to $24.7bn.

In the first quarter of 2014, GM's net income was $213m, depressed by $419m of special items related to Venezuela's currency devaluation and $1.3bn related to the ignition switch crisis and other vehicle recalls.

Sales declines of $2.22bn outside North America outweighed the slight North American increase to drive overall revenue down 4.5 per cent to $35.7bn.

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