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GM profit slumps by nearly 90%, with worse to come

General Motors saw a near-90% drop in profits (Matt Rourke/AP)
General Motors saw a near-90% drop in profits (Matt Rourke/AP)

General Motors’ first-quarter net income fell 88%, but it still managed to make 247 million dollars (£198 million) despite the arrival of the coronavirus pandemic.

US car makers suspended production in much of the world in late March. That cut revenue for the quarter by 6% to 32.7 billion dollars (£26.2 billion), which was better than expected.

During the past two months GM has cancelled its quarterly dividend for the first time in six years, suspended share buybacks and drew 16 billion dollars (£13 billion) from credit lines to prepare for the pandemic.

The company also withdrew its financial guidance for the year.

The second quarter almost certainly will be worse than the first. GM has had little cash coming in because car makers count revenue when vehicles are shipped from factories.

The Detroit car maker made 17 cents per share even though its factories in North American have been closed since March.

Excluding one-off items, the company made 62 cents per share, much better than the per-share earnings of 40 cents that Wall Street had expected, according to a survey by FactSet

GM expects to restart the majority of its factories in the US and Canada on May 18. The company said it will take extensive safety measures to protect employees from the virus.

Its cross-town rivals, Ford and Fiat Chrysler, are likely to reopen their plants on the same day.