“Our overall results underscore the work we have to do," said GM CEO Dan Akerson.
General Motors earnings dropped to $1.7 billion for the third quarter in the wake of more bad news from its European operations and disappointing results from South America.
GM’s third-quarter earnings, which worked out to $1.03 per share, compared with the $2 billion, or $1.20 per fully-diluted share, reported by the maker during the same period a year ago. But that was still better than many analysts were anticipating for the July – September 2011 period.
Analysts polled by the tracking firm FactSheet predicted GM earnings for the latest quarter would only reach 94 cents per share.
And the latest results mark the maker’s seventh consecutive quarterly profit since emerging from Chapter 11 bankruptcy protection in July 2009. GM’s net revenue, meanwhile, increased by 8% to $36.7 billion, compared with the third quarter of 2010. Unit sales for the quarter rose 9%, to 2.2 million, largely on increased demand in China.
“GM delivered a solid quarter thanks to our leadership positions in North America and China, where we have grown both sales and market share this year. But solid isn’t good enough, even in a tough global economy,” said Dan Akerson, chairman and CEO.
“Our overall results underscore the work we have to do to leverage our scale and further improve our margins everywhere we do business,” the executive added.
Earnings before interest and tax, or EBIT, came to $2.2 billion, compared with $2.3 billion in the third quarter of 2010. There were no special items in either period, GM’s financial statement said.
GM North America reported EBIT-adjusted earnings of $2.2 billion, worked out to an improvement of $100 million compared with the third quarter of 2010, but the long-troubled home market wasn’t the problem this time.
GM Europe finished the quarter in the red again after clawing its way to a breakeven during the first quarter and landing solidly in the black during the second quarter. For the July – September period, the subsidiary reported an EBIT-adjusted loss of $300 million – which was nonetheless an improvement of $300 million billion compared with the third quarter of 2010.
Earlier this week, GM announced the head of its European operations, veteran Nick Reilly, would retire January 1. Reilly, who has promised the Continental subsidiary would be back in the black for all of 2012, will be replaced by Karl-Friedrich Stracke, a senior German engineer.
GM International Operations reported EBIT-adjusted income of $400 million for the latest quarter, down 20% from year-earlier levels.
Meanwhile, GM’s South America operations reported only breakeven results on an EBIT-adjusted basis, down $200 million from the third quarter of 2010.
For the quarter, GM’s overall automotive cash flow from operating activities was a positive $1.8 billion.
And the maker ended the third quarter with very strong total automotive liquidity of $38.8 billion.
Automotive cash and marketable securities, including Canadian Health Care Trust restricted cash, was $33 billion compared with $33.8 billion at the end of the second quarter of 2011.
Based on current industry outlook, the company expects EBIT-adjusted results in the fourth quarter of 2011 will be similar to the fourth quarter of 2010 as a result of seasonal trends in North America and weakness in Europe, it said.
GM also expects to record a special item in the fourth quarter to recognize an $800 million non-cash settlement gain related to a Canadian Health Care Trust settlement, GM said in statement that accompanied the third quarter financial report.