General Motors said its second quarter net income was $0.2 billion, $1 billion less than in the same quarter last year. The huge drop is due mainly to recalls, estimated to cost $1.2 billion.
GM also suffered because of restructuring costs in Europe, estimated at $0.2 billion. Most of the losses in Europe were due to the closure of the assembly plant in Bochum, Germany.
The Detroit company added that a special charge of $0.4 billion was taken for the GM ignition switch compensation program. While there is no cap on the program, the charge is the company’s best estimate of the amounts that may be paid to claimants. However, due to the unique nature of the program, this estimate contains significant uncertainty and the total cost could increase by approximately $0.2 billion.
“Our underlying business performance in the first half of the year was strong as we grew our revenue on improved pricing and solid new vehicle launches. We remain focused on keeping our customers at the center of all we do, and executing our plan to operate profitably in every region of the world,” said GM CEO Mary Barra.
GM’s net revenue in the second quarter of 2014 was $39.6 billion, compared to $39.1 billion in the second quarter of 2013. In the first six months of 2014, revenue rose to $77 billion, up from $76 billion in the same period a year ago.
By Dan Mihalascu
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