By Ben Klayman and Deepa Seetharaman
DETROIT (Reuters) - General Motors Co (GM) reported a first-quarter profit that surpassed forecasts due to improving results in the struggling regions of Europe and South America, but the company's outlook for the next two quarters in North America disappointed the market, sending its shares down 1.8 percent.
GM's North American results in the first quarter also fell short of Wall Street's expectations.
Several analysts said the outlook in North America implied the results for the first nine months of the year would fall short of expectations.
"We're clearly seeing some improvement in the (U.S.) economy," Chief Financial Officer Dan Ammann told reporters on Thursday. "It's a modest underlying improvement, but it's patchy and it won't necessarily all go in a straight line."
GM said it expected its core North American results in the second and third quarters to largely match the first quarter due to scheduled downtime at its large truck plants. Citi analyst Itay Michaeli said the outlook implied adjusted earnings in North America in the first nine months of $5.1 billion, well short of the $5.6 billion he was expecting.
The quarter included the impact of $800 million in higher vehicle pricing and lower consumer incentives, half of which came in North America. Last year, GM offered heavy consumer incentives to drive sales in the U.S. market, something it did not do this year.
North America has been driving results for much of the industry this quarter, three years after faltering sales in the U.S. market led GM and Chrysler Group LLC to file for government-funded bankruptcy.
Parts maker Lear Corp on Thursday posted a stronger-than-expected profit due to North American demand. Last week GM's smaller rival Ford Motor Co (F) posted a higher-than-expected profit of $1.4 billion also on better demand.
Excluding one-time items mostly related to pension accounting in Europe, GM reported a profit of 93 cents per share. Analysts, on average, expected GM to earn 85 cents per share, according to Thomson Reuters I/B/E/S.
Net income fell to $1 billion, or 60 cents a share, from $3.15 billion, or $1.77 a share, in the same quarter a year earlier. Last year's quarter included a one-time gain of $1.5 billion related to the sale of stakes in Delphi and Ally.
Revenue for the quarter was $37.8 billion, up 4.4 percent from $36.2 billion a year ago.
GM's North American unit saw adjusted earnings jump 35 percent to $1.69 billion even as its share of the sales market fell to 16.7 percent from 18.3 percent last year. GM and Ford have both said they were willing to forfeit market share to maintain profits.
GM's $800 million gain in pricing matched its fourth-quarter performance. By maintaining higher vehicle prices, the world's largest automaker improves resale values, making its vehicles more attractive to buyers.
The Detroit company's European unit, which has been struggling to return to profitability, posted a loss of $256 million. However, the loss was smaller than analysts had expected and an improvement from the previous quarter's $562 million loss.
"Europe remains a work in progress," GM Chief Executive Dan Akerson said in a statement.
GM's international operations, which includes China, saw profits slide about 10 percent from last year to $529 million.
In South America, GM returned to a profit of $83 million after a loss of $225 million the previous quarter as it has begun rolling out new vehicles in that region. It had a similar profit in the same quarter last year.
GM ended the quarter with total automotive liquidity of $37.3 billion, largely unchanged with the end of 2011.
GM's stock fell 1.8 percent, or 42 cents, to $22.50 in early trading on the New York Stock Exchange.
(Reporting By Ben Klayman and Deepa Seetharaman. Editing by Maureen Bavdek)
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