World economy

GM posts huge losses, oil profits up

Article published on the 2008-08-01 Latest update 2008-08-01 15:47 TU

Blue skies for ExxonMobil
(Photo: Reuters)

US carmaker General Motors posted losses worth ten billion euros for the second quarter of 2008, while energy giant ExxonMobil has reported the biggest-ever quarterly profit for a US corporation. As oil prices rise, other energy companies, including France's Total, saw profits rise but there was gloom in other sectors.

General Motors cited restructuring costs, strikes by its US workforce and falling sales as reasons for the massive loss. In the same period last year it made a 572 million euro profit.

Record oil prices have hurt much of the economy, especially in the transport sector.

British Airways, which is in merger talks with Spain's Iberia, said that its net profit slumped 90 per cent during the first quarter. The International Air Transport Association is forecasting a 3.9 billion loss for the industry worldwide.

German luxury car maker BMW posted a 26 per cent drop in first-half profits, while Japan's second-biggest auto company, Nissan, saw a 42.8 per cent first-quarter drop, with high raw material costs and an unfavourable exchange rate adding to its problems.

But the oil giants have seen profits soar.

ExxonMobil, the world's most profitable publicly traded firm last year, saw a 14 per cent jump in quarterly net profit to 11.68 billion dollars (7.5 billion euros).

But that was actually lower than predicted and the company's share price fell 3.5 per cent in morning trade.

French energy giant Total reported net earnings of seven billion euros for the first half of 2008, up 15 per cent, while turnover jumped 21 per cent to 92.4 billion euros.

Norway's StatoilHydro posted a 36 per cent rise in net profit to 2.36 billion euros.

Tyson Slowcum, the Director of the energy programme for the organisation Public Citizen in Washington told RFI that oil companies are not using their profits responsibly.

"We would be much more comfortable with the huge profits of these oil companies were dedicating a much larger portion of their record earnings into investments that would help break America's - and the world's addiction to oil."  

 In the US 15,000 jobs disappeared in July, leaving unemployment at 5.7 per cent. The Commerce Department reports an annualised 1.9 per cent growth for the second quarter, lower than the expected 2.3 per cent, adding to fears of a recession.

In Europe the Euro zone has seen a 4.1 per cent inflation rate, the highest-ever year-on-year rise in prices since the currency was created, while unemployment remains at 7.3 per cent.