General Motors on Thursday reported a 90 percent decline in first quarter profit, citing losses in the home lending operations of its former financial arm.
The net profit for the largest automaker in the U.S. in the first quarter amounted to 62 million dollars, or 0.11 dollar per diluted share, including special items, compared with the net income of 602 million dollars, or 1.06 dollars per diluted share, in the year-ago quarter.
The decline in reported GM earnings is more than accounted for by losses in the residential mortgage business of GMAC Financial Services (GMAC), which are driven by continued weakness in the U.S. nonprime mortgage sector, said the company in a statement.
GM fell behind Toyota in the first quarter to become the world's second largest automaker. It sold an all-time first quarter record 2.26 million cars and trucks between January and March, up 3 percent over the same period of 2006. But Toyota sold 2.35 million automobiles globally in the same quarter.
"The first quarter of 2007 marked another quarter of continued progress in GM's global automotive operations," said GM Chairman and Chief Executive Officer Rick Wagoner.
He said GM, which lost 10.4 billion dollars in 2005 and 2 billion dollars in 2006, was able to expand vehicle sales and improve automotive profitability based on the progress in the turnaround initiatives in North America and Europe and the expansion strategy for key growth markets such as China, Russia and South America.
"We continue to see progress on the automotive bottom line as we implement the strategies laid out two years ago," he added.