General Motors Corp. and industry analysts credit the automaker's 29 percent increase in its second-quarter earnings to a return to profitability in its North American automaking business and continued strong results overseas. GM barely broke even building cars and trucks in North America in 1987, reaping $3.56 billion in 1987 profit from accounting changes, tax benefits and record contributions from its streamlined overseas businesses and its subsidiaries. But second-quarter revenue for the nation's biggest automaker rose 12 percent to $29.9 billion from $26.7 billion a year ago, breaking the previous quarterly record of $27.6 billion set in 1986 when the auto industry set a 16.3 million-vehicle annual sales record. GM reported net earnings of $1.5 billion, or $4.52 a common share, up from $1.17 billion, or $3.39 a common share, in the second quarter a year ago. ``It was a good quarter. The number of units produced per employee went up almost 17 percent versus second-quarter last year. That's phenomenally good, showing the kind of earnings General Motors can have if sales pick up,'' said Ronald Glantz, analyst with Montgomery Securities Inc. in San Francisco. Car and light truck sales in 1988 have continued to surge well ahead of pessimistic predictions issued in the wake of the October 1987 stock market crisis. Expectations for the year have risen to a consensus of about 15.6 million vehicles, and GM has benefited from the industry's surprisingly strong performance. ``Last year, (sales) volume was so low that most of their gains came from accounting changes. This year, it seems based on volume. Sales were strong in the first half, particularly in the second quarter,'' said Kathleen Heaney, analyst with Nikko Securities International in New York. Second-quarter revenue rose 12 percent from a year ago and broke the previous GM record for any quarter of $27.6 billion set in 1986, GM said. The earnings were the best for any quarter since second quarter 1984. GM also said that as of June 30, it had shaved $2.7 billion of the $4 billion it plans to trim from its costs during 1988. In the second quarter, operating income rose 64 percent, to $1.75 billion from $1.07 billion a year earlier. It rose 16 percent in the first six months, to $2.4 billion from $2.08 billion a year ago. GM said the improvement came both from a return to stronger profitability in North America and overseas performance stronger than last year's record. However, GM said it does not provide income for different geographic areas on a quarterly basis. GM's worldwide vehicle sales rose 9.3 percent in the second quarter, to 2.25 million. At the end of the second quarter, GM's North American-built cars and light trucks held 35.1 percent of the U.S. market, up slightly from 33.8 percent at the end of June 1987. In the first six months of 1988, GM earnings rose 13.3 percent to $2.6 billion, or $7.63 a share, on revenue of $56.34 billion from $2.29 billion, or $6.65 a share, on revenue of $52.8 billion a year ago. On Wednesday, GM reported earnings by its three subsidiaries _ General Motors Acceptance Corp., Electronic Data Systems Corp., and GM Hughes Electronics Corp. GM blamed higher interest expenses and a drop in auto financings for an 18.9 percent drop in GMAC earnings. Second-quarter earnings for EDS and Hughes were up 33 percent and 16.4 percent, respectively.
