The very successful 2013 Cheverolet Equinox and sibling GMC Terrain this week marked one million units built since they rolled out in 2009 as 2010 models at the depth of GM's troubles.(Photo: GM)
General Motors' reported third-quarter earnings of $1.48 billion, or
about 89 cents per share, this morning as robust profits in North
America more than offset continuing losses in Europe.
quarter's results were a decline of 15% from $1.7 billion, or $1.03 per
share a year ago. But excluding special items, earnings per share were
93 cents and that blew past Wall Street expectations of 60 cents,
revenue was $37.6 billion vs. $36.7 billion a year ago, about $2
billion more than expected, driven by both volume and higher pricing.
Through three quarters this year GM has increased in North America both
sales (up 3.5% year over year) and average transaction price (up 0.6%),
according to Edmunds.com data.
GM's International unit, which
includes China, posted an operational profit up 89% to $689 million and
the South American unit turned to a profit of $114 million from a loss
of $44 million a year ago.
"GM had a solid quarter because
customers around the world love our new vehicles and we're also seeing
green shoots take hold on tough issues like complexity reduction,
pensions and Europe," said CEO Dan Akerson in a statement.
quarterly loss was $478 million in Europe, where new-car sales are
headed for their weakest year in about two decades and GM's Opel
operation there already has gone more than a decade without a profit.
The loss in Europe a year ago was $292 million.
GM now estimates
its total loss in Europe this year will be $1.5 billion to $1.8 billion.
It sees 2013 as being "slightly better" and sees breaking even in
Analysts will be looking for more details on
GM's plans to restructure in Europe. Ford last week announced plans to
close three plants there, as it said its losses in Europe this year will
be $1,5 billion.
With the presidential election less than a week a
weigh, both sides are likely to try to use GM's report to continue
their debate over the administration's 2009 auto bailout and bankruptcy
But Jessica Caldwell, Edmunds.com' senior. analyst,
says the thrid quarter provide little to chew on. "GM's quarterly
earnings will be scrutinized more closely than usual ...," she says.
"But anyone looking for political artillery in these numbers will likely
be disappointed. General Motors' global performance is hardly out of
line with any other automaker, whether it's the company's strength in
the North American market, or its weakness in the European market."
U.S. government still owns 32% GM's common stock. Romney has said he
would immediately sell the government's GM shares. Obama's Treasury
Department officials have said they want to sell, but not until the
price is right.
GM's stock closed Friday at $23.28, the last day
of trading on the New York Stock Exchange before it was shut down
because of Hurricane Sandy. That's down 29.5% from its initial public
offering in November 2010, and at that price the U.S. government would
lose more than $15 billion on the $49.5 billion the Bush and Obama
administrations provided the company.
The European economic crisis
has hit all automakers in the region. GM's European plants are
operating at 70% of their production capacity, according to Jefferies
& Co. analyst Peter Nesvold.
GM has formed an alliance with
PSA Peugeot Citroen, buying a 7% stake in the struggling French
automaker. The partners expect to save $2 billion a year within five
years by coordinating development of four vehicles to be sold starting
in 2016 by PSA as Peugeots and Citroens and by GM as Opels and Vauxhalls
and through combined purchasing power.
Last week Ford announced
it would close assembly plants in Belgium and Britain. GM is talking
with German labor unions about closing a plant in Bochum after 2016.
its effort to cut its huge pension obligations with a buyout plan for
salaried retirees, GM said about 30% of eligible recipients accepted the
offer. Those who didn't accept the deal had their pension payments
transferred to Prudential Insurance, which annualized the payments.
said that because of the deal, it would contribute $2.6 billion in cash
in the fourth quarter to its salaried pension obligations in the fourth
quarter, smaller than its previously projected $3.5 billion to $4.5
billion. It will also record a pre-tax charge of $2.9 billion, compared
to a previous estimate of $2.5 billion to $3.5 billion.