GM profit helped by delayed spending

(Reuters) - General Motors Co posted a stronger-than-expected quarterly profit as its loss in Europe was not as bad as feared, and its results were boosted by delayed spending in North America.

Analysts said GM's North American outperformance added 14 cents to the second-quarter results, helping the company top Wall Street's expectations by 16 cents. GM's shares were little changed in early trading.

However, GM, which delayed the spending to the third quarter, said its average profit outlook for the second and third quarters combined in North America would still be the same as previously forecast, suggesting analysts will 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 will earn about $1.4 billion in the third quarter, analysts said.

Net income attributable to common shareholders in the second quarter fell 41 percent to $1.49 billion, or 90 cents a share, compared with $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.

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.

Jefferies analyst Peter Nesvold said the shifting of earnings was overshadowed, however, by the better-than- anticipated performance in Europe, where GM lost $361 million. Analysts polled by StreetAccount had expected a loss of $426 million. GM rival Ford Motor Co lost $404 million in the second quarter in Europe.

"Is Europe a function of execution or is it the calm before the storm?" said 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 skeptical though before they want to give them any credit."

GM officials acknowledged Europe remains challenging and they declined to say when it can 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 in a statement.

GM's loss in Europe compared with a profit a year earlier of $102 million. Chief Financial Officer Dan Ammann said the industry overall will face a challenging environment there in the second half of the year.

Shares of GM initially fell but were up 8 cents at $19.74 in early trading on the New York Stock Exchange.

(Additional reporting by Paul Lienert in Detroit; Editing by Gerald E. McCormick and Maureen Bavdek)

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