GM profit rises on finance, auto results

General Motors Corporation today posted higher quarterly earnings, boosted by record results at its credit arm and stronger profits…

General Motors Corporation today posted higher quarterly earnings, boosted by record results at its credit arm and stronger profits at its core automotive business.

GM's second-quarter earnings, at the high end of Wall Street forecasts, rose to $1.34 billion, or $2.36 per share, up from $901 million, or $1.58 per share, in the year-earlier quarter.

The Detroit automaker, whose shares rose 1.4 percent in early trading, confirmed its earnings projection for 2004, but set a target for the third quarter that was below most analysts' estimates.

"A shortfall in North American profits was offset by better earnings at GMAC, as well as modestly better earnings in Asia and Europe," JP Morgan analyst Mr Himanshu Patel wrote in a report to clients.

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GM and cross-town rival Ford Motor Co. suffered double-digit drops in US sales in June, which prompted them to boost their costly incentives to higher levels and raised concerns that they might have to cut production to reduce inventories of unsold vehicles.

GM's North American automotive operations posted stronger results, but the automaker said it was disappointed with overall figures.

"While earnings at GM North America improved, overall sales, market share and financial results were well below our expectations," GM Chief Executive Mr Rick Wagoner said in a release.

GM's incentives on its vehicles sold in the United States averaged $4,215 per vehicle in the second quarter, up more than $500 from $3,721 per vehicle in the second quarter last year, according to Autodata, which tracks industry incentives.

Analysts had expected GM to post second-quarter earnings between $2.00 to $2.45 per share, with an average estimate of $2.20 per share, according to Reuters Estimates.

Last month, GM had confirmed its second-quarter earnings target of $2.00 to $2.25 per share, excluding any one-time items.

General Motors' bonds performed better relative to Treasuries after the earnings report.