Brent Snavely

Detroit Free Press

GM CEO Mary Barra said Friday the automaker's first quarter results show that the company's strategy — to focus on areas where it is making money and to pull back on areas where it is not — is making a difference.

The automaker's profits soared 33% during the first three months of the year to $2.6 billion — a record for the company for the first quarter since it emerged from bankruptcy in 2009. It compares with the $1.93 billion GM earned during the same period a year ago.

The profits are notable since industry sales in North America are beginning to fall after seven years of sustained growth. GM's earnings come one day after Ford announced its first-quarter profits fell 35% to $1.6 billion. It was the eighth straight quarter that GM beat Wall Street expectations.

GM's bigger profits were driven by mostly by profits in North America and China. In Europe, a division that has dogged the automaker for years, GM lost $200 million.

Barra said Friday that GM's profits will "immediately improve" after it completes the sale of its European division. GM agreed to sell its Opel and Vauxhall brands to PSA Groupe for $2.2 billion in March and expects to take a $4.5 billion charge when it completes the sale later this year.

“For GM, the sale is another step in our ongoing work to transform the company by strengthening our core business, investing resources in higher return opportunities, including personal mobility, and returning significant capital to our shareholders," Barra said.

Related:

Ford first quarter profits fall 35% to $1.6B

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If it unloads European unit, General Motors could benefit

GM to sell Opel, Vauxhall to PSA Groupe for $2.2 billion

GM CFO Chuck Stevens said the sale of Opel will allow the automaker "to take significant structure out of the business" by reducing its corporate staff and engineers.

"We think that's going to generate significant cost savings," Stevens said.

The cost-cutting tied to the sale of Opel is part of an ongoing process that began in 2014. GM expects it will save $6.5 billion by 2019 from those efforts.

During the first quarter, the automaker's performance translated into earnings of $1.70 per share, easily beating Wall Street's expectations. Analysts, on average, thought GM would earn $1.48 per share.

GM also said its global revenue increased 10.6% to $41.2 billion.

GM's stock rose 10 cents, or 0.3%, on Friday to close at $34.64.

Brian Johnson, an analyst for Barclays, said investors continued to worry about expectations that industry sales will fall in the U.S. and GM's profits will suffer as it deals with bloated inventory.

"We believe GM deserves to be better rewarded for overall strong results and execution," Johnson said. "But, unfortunately sometimes the prevailing market sentiment can be overly difficult to fight."

GM's record first-quarter results were mostly fueled by its profits in North America and China. Here is how the company performed in its main regions:

In North America, GM's pre-tax profits increased to $3.4 billion compared with $2.3 billion for the same period last year.

In Europe, the automaker reported a pre-tax loss of $200 million. Last year, the company did not make money or lose money in Europe during the first quarter.

GM's international division, which includes China, reported a pre-tax profit of $300 million compared with $400 million for the same period a year ago. In China, GM earned $500 million during the quarter.

In South America, the automaker reported a pre-tax loss of $100 million, equal to the $100 million loss for the same period last year.

Contact Brent Snavely: 313-222-6512 or bsnavely@freepress.com. Follow him on Twitter @BrentSnavely.