GM posts strong profit on U.S. demand
By Ben Klayman and Deepa Seetharaman
DETROIT, Oct 30 (Reuters) - General Motors Co on Wednesday posted a better-than-expected quarterly profit on strong results in its core North American market and the first revenue increase in Europe in two years.
GM Chief Financial Officer Dan Ammann said the No. 1 U.S. automaker's European unit remains on track to achieve its target of breaking even in the next year or so.
"The story in Europe overall is really consistent with the plan we laid out," he told reporters. "Our overall objective of getting to break-even by mid-decade, clearly we're well on track toward that.
GM's money-losing European unit has been a key focus for investors since the automaker went public in the autumn of 2010 following a bankruptcy reorganization and a $49.5 billion government bailout. GM has lost money in that region for 13 straight years.
GM's success in Europe echoed that of its smaller U.S. rival Ford Motor Co, which last week boosted its full-year profit outlook and painted a brighter picture in Europe.
GM's net income attributable to common shareholders fell to $757 million, or 45 cents a share in the third quarter, compared with $1.48 billion, or 89 cents a share, in the year-earlier quarter. But operating earnings rose almost 15 percent to $2.64 billion.
Excluding one-time items related to the repurchase of preferred stock and tax expenses, GM earned 96 cents a share, 2 cents more than analysts polled by Thomson Reuters I/B/E/S had expected. GM's shares rose 1.5 percent in premarket trading.
The results in North America and Europe helped to offset weaker-than-expected earnings in GM's international operations, which include China and South America. The international earnings fell 61 percent to $299 million as the markets outside China were a drag. Analysts polled by Reuters had expected a profit of $329.2 million.
Revenue in the quarter rose 3.7 percent from last year to $38.98 billion, but that was short of the $39.49 billion analysts had expected.
GM's operating earnings in North America jumped 27 percent to a better-than-expected $2.19 billion as the company benefited by $400 million in higher vehicle pricing. Analysts polled had expected $2.13 billion.
The profit margin in North America jumped to 9.3 percent from 7.7 percent last year. GM has set a goal of hitting 10-percent margins. It was the highest profit margin in that region in two years.
The loss in Europe fell by more than half to $214 million from a loss of $487 million last year as GM squeezed out $400 million in costs and boosted revenue year over year for the first time in two years. Analysts had expected a loss of $267.7 million.
The European results continued the trend from the second quarter, when the loss was almost one-third smaller than Wall Street expected.
The company's South American profit jumped 79 percent in the quarter to $284 million, more than the $102.9 million analysts had expected.