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Business

GM profits tumble after massive recall costs

The world's second-largest carmaker, General Motors of the US, has reported a drastic plunge in first-quarter earnings. The company said the sobering result was mainly due to high recall costs and restructuring.

General Motors announced Thursday

its first-quarter profit fell by a staggering 86 percent. The company booked net earnings of $108 million (78 million euros) in the first three months of the year.

The bottom-line result marked the worst quarterly performance since GM posted a net loss shortly after leaving bankruptcy in 2009.

The Detroit-based carmaker said it took a $1.3-billion hit for having to recall a total of some seven million vehicles worldwide

over technical issues in the ignition system

of various models.

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However, CEO Mary Barra insisted that the firm's core business had gone well, with Q1 turnover rising slightly to $37.4 billion.

General Motors added it had incurred $300 million in restructuring costs, mostly in Europe. It said $200 million of it alone were caused by measures surrounding the end-of-year closure of an Opel plant in Bochum, Germany.

GM's struggling European subsidiary

was reported to be on its way out of being a financial burden on the parent company.

"We're doing better than we'd expected at the beginning of the year," Opel chief Karl-Thomas Neumann commented Thursday. "We've increased our earnings and have sold more vehicles in a very demanding market environment."

hg/rc (Reuters, AP, dpa)

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