GM profits expected to dip a little

GM profits expected to dip a little

GM reports first-quarter earnings this morning and Wall Street is expecting about $ 1.85 billion before taxes, roughly $ 100 million less than a year ago.

Investment analyst Brian Johnson at Barclays, who forecasts $ 1.84 billion on worldwide auto operations, tells clients in a note that they should look for declines in GM's European and Latin American operations, together totalling around $ 655 million. But he figures that will be offset by a gain vs. last year of $ 435 million in North America and $ 137 in Asia-Pacific operations.

Here are some factors he says affect GM's earnings and share price in coming months:

• Too many trucks in stock. The automaker built 294,000 full-size pickups in the quarter. "GM is likely to work down this inventory over the year as it takes plant downtime for conversion to" the next-generation full-size pickups, but, he says, having so many on hand is "a poor setup to the quarter" and will make investors nervous.

• Problems in Europe. GM has too much capacity at Opel and can't close factories because of contract restrictions. But, he says, "we reiterate our view that although an actual plant closure is unlikely, a plant can potentially be 'idled' (which would reduce capacity), even if contracts prevent it from being formally closed until 2014."

• Isuzu talks. Makes sense for GM to buy about 10 of Isuzu to get access to commercial vehicle markets in Asia, he says.

• Pension strategy. Johnson says GM might be motivated by Ford's recent announcement that it will offer lump-sum pension buyouts, "though we find that outcome unlikely."