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GM chief tells shareholders company lacking in profits

By John Porretto
The Associated Press

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A popular topic at GM's 96th annual meeting was the effect of rising gas prices on business, particularly on the sale of high-profit but gas-slurping pickups and sport utility vehicles.

The automaker has yet to see that affect buying habits, though. GM reported yesterday that truck sales rose 11 percent in May. Sales were up for full-size pickups and various SUVs.

"If we ask (customers), 'Are you changing your vehicle of choice at this point?' the answer is no," Wagoner said. "It's our hope and frankly our expectation that gas prices should be leveling off and coming back down later in the year, but we'll have to see how that goes."

GM earned $1.3 billion in the first quarter, lifted by strong results at its financing arm and improved business in growing Asian markets. But the company said automotive operations in North America and Europe continued to be hampered by intense pricing pressure, including heavy consumer incentives.

GM is hoping that a restructuring, along with new products including the Cadillac STS premium sedan, will improve the automaker's finances.

Still, executives said there is no guarantee of a return to profitability by the end of 2004, an earlier goal.

Wagoner also said that health-care costs, which represent a $5 billion annual expense, and what he called unfair trade practices are hurting GM.

Also yesterday, GM shareholders re-elected the board of directors and sided with management by voting down seven-of-seven shareholder-presented proposals.

Those proposals dealt with issues such as creating an outside chairman independent of the CEO and eliminating new stock options to top management.

Copyright © 2004 The Seattle Times Company

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