GM posts profit, sees break even in Europe by mid-decade

DETROIT Wed Oct 31, 2012 7:02pm IST

Cars made by Chevrolet are seen at a dealership in Dallas December 3, 2008. REUTERS/Jessica Rinaldi/Files

Cars made by Chevrolet are seen at a dealership in Dallas December 3, 2008.

Credit: Reuters/Jessica Rinaldi/Files

Stocks

   

DETROIT (Reuters) - General Motors Co(GM.N) posted a surprisingly strong profit on Wednesday and said it was targeting a return to break-even levels in its European operations by mid-decade after a loss of as much as $1.8 billion in that region this year.

Shares of the automaker rose 4.9 percent to $24.42 in trading before the market opened.

"We still have a lot of work to do, especially in Europe," GM Chief Financial Officer Dan Ammann said in a statement.

GM's third-quarter net income attributable to common shareholders fell to $1.48 billion, or 89 cents a share, from $1.74 billion, or $1.03 a share, a year earlier.

Excluding one-time items, GM earned 93 cents a share, far above the analysts' average estimate of 60 cents, according to Thomson Reuters I/B/E/S. Earnings in the company's North American and international units came in above expectations.

Revenue rose to $37.6 billion from $36.7 billion. Analysts had expected $35.7 billion.

GM said it expected a full-year operating loss of $1.5 billion to $1.8 billion in Europe, depending on the level of restructuring in the fourth quarter. Last year, it lost $747 million in the region.

The company, which sells in Europe largely under the Opel brand name, said it was targeting results there to be slightly better in 2013 than in 2012 and to reach break-even by mid-decade.

GM still sees the European economy as flat to slightly deteriorating. "We're not banking on a sharp turnaround ... at this point," Ammann told reporters on a conference call.

Opel has been a drag on GM's results, leading the automaker to push for changes at the European unit, which has lost a total of $16 billion over the past dozen years despite repeated rounds of job cuts. In the third quarter, GM Europe posted an operating loss of $478 million, in line with what analysts had expected.

GM said Vice Chairman Steve Girsky, who is leading the restructuring of Opel, will provide more details of the turnaround efforts there on a conference call with analysts later on Wednesday.

For the fourth quarter, GM said it expected operating earnings similar to or slightly better a year earlier.

This quarter could benefit from a reversal of a significant portion of a tax reserve, known as a valuation allowance, on U.S. and Canadian deferred tax assets. At the end of September, those cumulative allowances totaled almost $39 billion combined, and eliminating some of that would reflect a confidence in the company's financial prospects.

(Reporting by Ben Klayman and Paul Lienert; Editing by Chizu Nomiyama and Lisa Von Ahn)

Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

Reuters Showcase

Record Profit

Record Profit

Apple iPhone sales trample expectations as profit sets global record  Full Article | Related Story 

Obama In India

Obama In India

In parting shot, Obama prods India on religious freedom.  Full Article 

Restructuring

Restructuring

Max India to be split into three separate companies.  Full Article 

India’s Male Tenor

India’s Male Tenor

India’s lone male tenor wants to ‘Indianise’ opera  Full Article 

Indian Equities

Indian Equities

Hornbill raising $250 mln to invest in equities - partner.  Full Article 

Ratings Downgrade

Ratings Downgrade

S&P downgrades Russia's sovereign credit rating to "junk".  Full Article 

Facebook Outage

Facebook Outage

Facebook takes blame for service outages, which hit wider Web.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage