DETROIT - Despite persistent labor woes, General Motors said yesterday that first-quarter earnings improved 76 percent over a year ago on the strength of its best domestic performance in a decade.
The company attributed the earnings improvement to strides in cutting manufacturing costs while introducing a slew of new car and truck models in the U.S. market.
"It's clear that we are moving in the right direction," said John Smith Jr., chair and chief executive.
The company reported net profit of $1.796 billion, or $2.30 a share, compared with earnings of $1.019 billion, or 94 cents a share, a year ago, when earnings were depressed $900 million by a two-week strike.
The biggest improvement came in North America, where GM earned $764 million compared with a strike-induced loss of $279 million a year ago.
It was the best financial result in North America since 1988.
"Slowly the company appears to be putting all the pieces together," said David Andrea, an analyst for Roney & Co. in Detroit.
The results were better than most analysts expected. GM shares rose five-eighths of a point to 53 5/8 on the New York Stock Exchange.
But there is growing concern about the outlook for auto sales.
"Vehicle demand is not growing much and incentives are increasing," said John Casesa, analyst with Wertheim Schroder & Co.
"That environment puts pressure on profit margins," Casesa said.
There is also worry about GM's continued rocky relationship with its unions. A strike at two Ohio parts plants in March 1996 shut down most of the company's assembly operations for two weeks.
The company was hit with two local strikes in the first quarter - costing about $40 million in profit - and is now confronting a weeklong strike by the United Auto Workers at its Oklahoma City car assembly plant.
Thirty local contracts are still not signed.
Despite having to offer richer sales incentives to customers, GM said its net profit margin - income as a percent of net sales - was 4.8 percent in the quarter, up from 2.3 percent a year ago.
In North America, it was 3.1 percent, up from a loss of 1.3 percent last year.
Internationally, GM earned $317 million, down from $432 million. The reduction was largely a result of lower profit in the tough European market.