General Motors Co. (GM) announced that it would invest $20 million in its Fairfax Assembly plant in Kansas City in order to manufacture machinery, equipment and special tooling. The investment at the plant will help GM manufacture a hybrid model with eAssist – a light electrification technology that will boost fuel economy needed on highway by 25%.
The plant, opened in 1987, manufactures Buick LaCrosse and Chevrolet Malibu. In 2010, it produced 320,000 units of Malibus and LaCrosses.
GM’s investment in Kansas City plant is a part of its $2 billion investment plan at 17 assembly and components plants in 8 states in the U.S. Through the $2 billion investment plan, the company aims to create or preserve more than 4,000 hourly and salaried jobs at the plants.
Recently, GM announced to invest $49 million for tooling and equipment of its powertrain plant in Bedford, Massachusetts. The investment will support the production of 8-speed transmission and a small engine at the plant in future. It will create or retain 91 jobs.
Apart from the above mentioned plants, facilities that received investment under the same plan include Bowling Green, Kentucky; Arlington, Texas; Toledo, Ohio; Bay City, Detroit; Flint, Lansing and Warren, Michigan.
GM, a Zacks #3 Rank (Hold) stock, earned a profit of $3.2 billion or $1.77 per share in the first quarter of 2011 that increased more than threefold from $865 million or 55 cents per share a year ago. However, more than half of the profits have been contributed by an one-time gain from sale of the company’s ownership interest in Delphi Automotive LLP ($1.6 billion) and Ally Financial Inc. ($300 million).
Excluding these gains and a $0.4 billion goodwill impairment charge at GM Europe (GME) resulting from a change in accounting standards and charges of $0.1 billion at GM International Operations (GMIO) related to revised tax regulations affecting the company’s India joint venture, GM’s profit stood at $1.7 billion or 95 cents per share, topping the Zacks Consensus Estimate by a penny. It was also GM's biggest profit in 11 years since earning $1.8 billion in the second quarter of 2000.
Revenues during the quarter went up 15% to $36.2 billion on sales of 2.2 million vehicles globally, up 11% from the prior year. It exceeded the Zacks Consensus Estimate of $35.2 billion.
Strong demand for its fuel-efficient lineups including Chevrolet Cruze compact and Equinox crossover helped boost the company’s sales. The automaker occupied a market share of 11.5% during the quarter, up from 11.1% in the year-ago quarter.
However, GM is still lagging behind its hometown rival, Ford Motor Co. (F), in spite of selling more vehicle units. Ford posted a 48% rise in profit to $2.61 billion in the first quarter of 2011 from $1.76 billion in the same quarter of 2010. On an earnings per share basis, profits rose 35% to 62 cents from 46 cents a year ago, thereby topping the Zacks Consensus Estimate by 12 cents.
The company’s revenues escalated 18% to $33.1 billion, surpassing the Zacks Consensus Estimate of $30.5 billion. The increase in revenues was backed by a 12% rise in sales to 1.40 million vehicles.
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