Nissan says CEO Ghosn's salary rose 2.5 percent last year
YOKOHAMA Nissan Motor Co on Tuesday said it paid CEO Carlos Ghosn 1.098 billion yen (£8 million) in the year ended March, up 2.5 percent from the previous year.
DETROIT General Motors Co (GM.N) posted a higher-than-expected second-quarter profit as it managed to hold prices steady in Europe despite the weak economy, and shifted some costs in North America to the third quarter.
GM said the deferred spending was related to the reallocation of advertising money around the Olympics, engineering costs related to the redesigned full-size trucks being launched next year and additional production downtime.
Analysts said they were impressed that GM was able to maintain pricing power in Europe in the face of brutal market conditions and aggressive deals offered by rivals such as Volkswagen (VOWG_p.DE). But they noted that most of the amount by which the U.S. auto company's earnings exceeded expectations came from the delayed spending in North America; concerns about Europe remain a big drag on GM's stock price.
GM shares were down about 3 percent in afternoon trading at $19.10, far below the $33 at which the stock debuted in the fall of 2010.
"Is Europe a function of execution or is it the calm before the storm?" asked Jefferies analyst Peter Nesvold, who has a "hold" rating on GM shares.
"I feel like Europe will continue to be a black hole until we're at least able to frame the magnitude of the downturn," he added. "They showed some nimbleness in this quarter that they have not shown so far since the new GM went public. People will remain sceptical, though, before they want to give them any credit."
GM reported a second-quarter loss of $361 million in Europe, which was less than rival Ford Motor Co's (F.N) $404 million loss in the region but much worse than GM's profit a year ago of $102 million. Analysts polled by StreetAccount had expected a loss of $426 million for GM Europe in the latest quarter.
GM's net income attributable to common shareholders in the quarter fell 41 percent to $1.49 billion, or 90 cents a share, from $2.52 billion, or $1.54 a share, in the year-earlier quarter. Analysts polled by Thomson Reuters I/B/E/S had expected 74 cents a share. Analysts said North America contributed 14 cents of the 16 cents by which GM profit beat expectations in the second quarter.
Revenue fell to $37.6 billion from $39.4 billion a year before as the stronger U.S. dollar hurt results. Analysts had expected $38.58 billion.
EUROPE REMAINS A CHALLENGE
GM executives acknowledged that Europe -- where the company sells the Opel and Vauxhall brands -- remained challenging and they declined to say when GM would return to profitability in that region, where it has racked up 12 years of losses.
"We clearly have more work to do to offset the headwinds we face, especially in regions like Europe and South America," GM Chief Executive Dan Akerson said.
GM has made progress on all the key components of Opel's restructuring, and management and German labour unions continue talks on improving productivity and reducing costs and manufacturing capacity with an agreement expected between the sides this autumn, he added.
Chief Financial Officer Dan Ammann said the industry overall will face a challenging European environment in the second half of the year.
Opel board Chairman Stephen Girsky said GM did not react quickly enough to the deepening crisis in Europe and was working hard to cut costs and bureaucracy there.
Ammann, who expects global business trends in the second half similar to the first half, said GM would address high Opel vehicle inventories in the third and fourth quarters. Morgan Stanley analyst Adam Jonas said Europe is likely to lose materially more money in the second half of the year compared with the first six months.
Part of GM's cost-cutting strategy in Europe included forming an alliance with and taking a small stake in PSA Peugeot Citroen (PEUP.PA). However, executives said GM will not inject additional capital into the struggling French automaker, which is cutting more than 10,000 domestic jobs.
"We have no intention of putting more money into PSA," Ammann said.
Opel has been a drag on GM's results, leading the automaker to push for changes at the money-losing European unit, including ousting the CEO last month. Ammann declined to say when a permanent replacement would be named.
Ammann said GM in Europe has begun reducing the number of temporary and contract employees, and is working with the union "on more flexibility in cost management and productivity management."
Opel's supervisory board had previously approved a mid-term business plan, which runs through 2016. But real savings in a restructuring will not come until GM negotiates a deal with labour unions to close the Bochum, Germany, plant after 2016.
CHINA EARNINGS SLIP, FUTURE LOOKS BRIGHT
Meanwhile, GM's international business unit, which includes the crucial Chinese market, saw earnings slip 2.8 percent to $557 million in the second quarter. GM said it increased market share in China in the first half to 14.5 percent from 14 percent for all of last year.
Akerson emphasized that he expects annual Chinese auto industry sales to hit 30 million vehicles by the end of the decade. The company has said it expects total industry sales in China this year to reach 19.5 million to 20 million, an increase from about 18.5 million in 2011.
GM officials also said they are one year into a two-year transition to the redesigned Chevrolet Silverado and GMC Sierra.
GM said its outlook for the second and third quarter profits would still average the same combined as it previously forecast, suggesting analysts may need to cut their estimates for the third quarter.
GM had previously said its second- and third-quarter operating profit in North America would be similar to the $1.7 billion it reported in the first quarter. It earned $1.97 billion in the second quarter, implying it would earn about $1.4 billion in the third quarter, analysts said.
(Additional reporting by Maria Sheahan in Frankfurt; Editing by Gerald E. McCormick, Maureen Bavdek and Phil Berlowitz)
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