Auto Sales, Mortgage Lending Power GM to Huge Quarter

General Motors'

(GM) - Get Report

first-quarter earnings wiped out analysts' expectations as the company continued to sell cars, trucks and mortgages in North America at a scorching pace.

Excluding various items including its stake in

GM Hughes

(GMH)

, the company said earnings rose to $791 million, or $1.39 a share, from $321 million, or 57 cents a share, a year ago, excluding unusual items and Hughes. GM itself as recently as last month predicted it would earn $1.20 a share in the first quarter, and analysts on average were predicting $1.14 a share. Revenue in the latest quarter was $44.3 billion, up from $40.7 billion last year.

GM forecast second-quarter earnings of $2 a share excluding Hughes and full-year earnings of $5 a share on that basis. According to First Call, analysts had been expecting earnings of $1.59 a share in the second quarter and $4.17 a share in the year. The company also raised its production estimates for itself and the whole industry.

The company cited strong vehicle sales and a good product mix in North America for the surprisingly strong results. The global automotive operations earned $467 million in the first quarter compared with $20 million a year ago, with global production up 3.7% in the first quarter from a year ago. GM North America earned $625 million in the first quarter of 2002, compared with $120 million last year, with production volume rising 11.4%. The company said European operations, which "have not yet realized full benefit from the current restructuring," lost $125 million in the latest quarter.

The company's finance arm, General Motors Acceptance, earned $439 million in the first quarter, up 2% on a "significant" increase in earnings from mortgage operations. Income from automotive financing declined due to higher credit losses and unfavorable borrowing spreads, which were partially offset by strong retail asset growth in North America.