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)

  • Most Popular
  • Most Shared

DEFENCE

REUTERS SHOWCASE

Power Theft

Power Theft

India to invest $4 billion to tackle power theft  Full Article 

Debt Funds

Debt Funds

India monitors foreign flows into debt funds, may tighten rules  Full Article 

Bulgari Back in India

Bulgari Back in India

CEO: we shouldn’t have left India so we’re back  Full Article 

 Hindu "Modi-fication"

Hindu "Modi-fication"

Fears grow about Hindu "Modi-fication" of education  Full Article 

Weak Credit

Weak Credit

Hard to hit tax revenue target, credit weak - Jaitley  Full Article 

China Rate Cut

China Rate Cut

China surprises with interest rate cut to spur growth  Full Article 

Gold Imports

Gold Imports

RBI cautious on response to gold import surge  Full Article 

Economic Corridor

Economic Corridor

China commits $45.6 billion for economic corridor with Pakistan  Full Article 

Overseas Funds

Overseas Funds

RBI says overseas borrowed funds can be parked with banks in India  Full Article 

Reuters India Mobile

Reuters India Mobile

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