General Motors returned to profitability in the first three months of the year, the automaker reported Monday. It was GM’s first profit since 2007.
GM, which emerged from bankruptcy last July, earned $865 million on revenue of $31.5 billion. A year ago, GM’s predecessor company lost nearly $6 billion on revenue of only $22.4 billion, as sales plunged and the company hurtled toward bankruptcy.
GM had reported losses the two previous quarters since emerging from bankruptcy. But the profit in the first quarter was expected.
Worldwide vehicle sales jumped 24% to 1.9 million vehicles, as sales in the U.S. rose 15% and sales in China surged 71%. GM also had free cash flow of $991 million in the period, leaving it with $35.7 billion in cash on hand.
“We’re pleased with our first-quarter performance, in particular achieving profitability,” said chief financial officer Chris Liddell in the company’s statement. “We’re also steadily growing in emerging markets, keeping our costs under control, generating positive cash flow and maintaining a strong balance sheet.”
This return to profitability is an important first step for the company being able to sell shares in an initial public offering, and for taxpayers to get back some or all of the $50 billion in bailouts the automaker received last year. GM repaid its government loans in April, but most of the help was in return for Treasury receiving a 61% stake in the automaker. A sale of stock and a strong earnings stream are necessary for the government to get that money back.
GM had previously said it hoped to be ready for an IPO by the end of the year, but that timing would depend on both profitability and market conditions. Liddell wouldn’t give any further guidance on the timing Monday.
“Making a profit in the first quarter means we’re better off than we would have been otherwise,” he said. “That’s heartening. I wouldn’t take too much from that. The IPO will happen in good time when the company is ready and the market is ready.”
[via CNN Autos]
Photo courtesy of paul (dex) down under under the Creative Commons License