General Motors Co. Chief Financial Officer Chris Liddell said the automaker's $865 million first- quarter net profit is a "good, useful step" on the way to an initial public offering that may come this year.
The largest U.S. automaker reported its first profit yesterday since the second quarter of 2007, aside from last year's July 10 to September 30 period when it was recapitalized in its emergence from bankruptcy. GM said it generated $1 billion in free cash flow, while revenue rose 40 percent from a year earlier to $31.5 billion.
Liddell echoed Chief Executive Officer Ed Whitacre's statement that GM may hold an IPO as soon as this year. GM will need to show continued profit and cash flow to prove to investors that the company is ready to resume public trading, Liddell said.
"This is a good, useful step on the road to the IPO," Liddell told reporters yesterday. "I'd like to think the first quarter demonstrates we're making good progress. Now that we've achieved profitability, the next step is to achieve sustainable profitability."
GM still faces challenges including restructuring its Ruesselsheim, Germany-based Opel unit and a fragile global economic recovery, said analysts, who said the automaker needs to show it can repeat the first-quarter performance.
'Baby Steps'
"These are good baby steps, but they still have a way to go," said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management in Grand Rapids, Michigan. He helps manage about $18 billion, including debt of the finance company that was formerly part of the automaker.
GM is working to cut 8,000 jobs at Opel and reduce its capacity by 20 percent, Liddell said. Continued restructuring costs probably mean losses for the unit beyond the $506 million pretax first-quarter deficit, he said.
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