Massive car recall hurts General Motors profit
General Motors said yesterday that first-quarter profit tumbled 88 per cent after a massive recall due to defective ignition switches, but results still topped expectations on strong pricing for its redesigned pickup trucks in North America and improvement overseas. The company said its core operating outlook remained on target for the year. GM said in January, before the recall became public, it expected a slight uptick in pre-tax profits this year. Net income in the first quarter fell to $108m from $873m in the year-earlier period. The most recent quarter included recall costs of $1.3bn.
Depression drug drags on Eli Lilly’s earnings
US drugmaker Eli Lilly yesterday reported lower than expected revenue, hurt by plunging sales of its Cymbalta depression drug, which is now facing generic competition. Lilly said it earned $728m in the three months to the end of March. That compared with $1.55bn in the year-earlier period, when Lilly posted special gains from transferring rights to a diabetes drug. Company revenue fell 16 per cent to $4.68bn, while Wall Street expected $4.8bn. Indianapolis-based Lilly, which is trying to regain its footing after three years of patent expirations on its biggest prescription drugs, this week agreed to buy Novartis' animal health unit for $5.4bn.
Winter ices growth for United Postal Service
United Parcel Service (UPS), the world’s biggest courier company, yesterday reported a 12 per cent fall in quarterly profit due to increased overtime and transport costs related to a colder-than-usual winter in the US. The company also warned that full-year earnings were likely to come in at the lower end of its earlier forecast, citing the “challenging” start to 2014. UPS joins a growing list of companies, including closest rival FedEx, that have blamed the harsh winter for weak results and a subdued outlook for 2014. Total revenue rose 2.6 per cent to $13.78bn in the quarter. The company’s net income fell to $911m, down from $1.03bn a year earlier.
Newly-merged American Airlines tops forecast
American Airlines, the world’s largest carrier, yesterday posted a higher-than-expected quarterly profit as operating expenses fell slightly. Net profit was $480m for the first quarter, up from $297m a year ago for the combined AMR Corp and US Airways Group, which came together in a merger in late 2013. Quarterly revenue was nearly $10bn. Combined operating expenses in the quarter were $9.3bn, down 0.3 per cent. American Airlines Group will be spending the next year or so melding technology systems and implementing new processes, tasks that have challenged previous airline mergers and hurt customer service.
Caterpillar builds expectations for construction
Caterpillar yesterday posted a quarterly profit that topped analysts’ estimates and raised its full-year outlook on a stronger-than-expected rebound in sales to the construction industry. The news sent shares of the world’s largest maker of earth-moving machinery up four per cent as the market opened. Caterpillar said it expected its sales to the global construction industry to increase 10 per cent from 2013, up from a previously anticipated rise of about five per cent. But it cautioned that 2014 would be “another very tough year” for mining, another key market for the firm.