GM posts $2-bn profit ahead of stock offering
General Motors Co posted a $2 billion third-quarter profit on Wednesday, driven by an accelerating turnaround in North America as it rushes to complete an initial public offering of stock set for next week.business Updated: Nov 10, 2010 21:07 IST
General Motors Co posted a $2 billion third-quarter profit on Wednesday, driven by an accelerating turnaround in North America as it rushes to complete an initial public offering of stock set for next week.
GM said it expected to post solidly profitable results for 2010, its first full-year profit since 2004. A large part of that profit could be attributed to North America, which formerly had posted deep losses.
The automaker reported increased cash earnings in North America for a third consecutive quarter, with its international results flat to up slightly and a bigger loss in Europe.
"We know we have much work to do, we still have to fix Europe," Chief Executive Dan Akerson said in a conference call.
The automaker earlier in November released details for its planned IPO that could include the sale of up to $13 billion of common and preferred shares and would allow the US Treasury to reduce its stake in GM.
GM executives have started an investor road show to support the IPO plans and Akerson and Chief Financial Officer Chris Liddell did not take questions after a presentation on third-quarter results.
In North America, GM's earnings increase in the third quarter was driven mainly by a reduction in incentives and increases in sales from showrooms over the prior three months.
The automaker also reported an increase in truck production that supported the results. GM expects to build more cars in the fourth quarter with the introduction of the Chevrolet Cruze compact car.
GM's profit met the expected range it outlined last week when it released details of its plans for an offering of common and preferred shares. The automaker reported earnings per share of $1.20 for the quarter.
GM reported earnings before interest and tax of $2.3 billion overall, with $2.1 billion from North America. It also generated free cash flow of $1.4 billion.
GM posted revenue of $34.1 billion in the third quarter. GM emerged from its government-funded bankruptcy in July 2009, making year-ago comparisons less relevant.
GM's profit topped US No. 2 rival Ford Motor Co's $1.7 billion third-quarter profit, and Chrysler's $84 million net loss for the quarter.
GM expects earnings before interest and tax to be significantly lower in the fourth quarter than it was through the first three quarters due to vehicle introduction costs and spending for future products among other expenses.
The automaker expects to take a $700 million noncash charge in the fourth quarter in connection with a plan to acquire the US Treasury's holdings of GM preferred shares.
The US automaker reported losses totaling about $88 billion from 2005 to 2009, when it fell into bankruptcy, as losses mounted in North America.