GM 3Q profit falls 12 pct., but beats expectations
ASSOCIATED PRESS October 31, 2012 8:18AM
Updated: October 31, 2012 12:58PM
DETROIT — Growing losses in Europe and warranty costs in North America lowered General Motors’ third-quarter profit by 12 percent.
But the company posted better-than-expected results in South America and internationally, and gave a rosier outlook for Europe. Its overall performance soundly beat Wall Street expectations, pushing up the stock price in Wednesday premarket trading.
GM said it earned $1.5 billion from July through September, down from $1.7 billion a year earlier.
The company earned 89 cents per share compared with $1.03 in 2011. Revenue grew 2.5 percent to $37.6 billion.
Excluding one-time items, GM made 93 cents per share, easily beating Wall Street expectations of 60 cents.
That drove GM shares up $1.05, or 4.5 percent, to $24.33 in premarket trading.
Chief Financial Officer Dan Ammann said the company had solid profits in South American and internationally outside of China, showing that its moves to fix the business are working.
“We can make those improvements and deliver the results,” he said.
The company also predicted its fourth-quarter pretax earnings would be about the same as last year’s $2.2 billion, and it expects to break even in Europe by the middle of the decade as it rolls out new, more appealing products. GM expects a full-year European pretax loss of $1.5 billion to $1.8 billion in 2012, improving slightly in 2013. The company lost $747 million in Europe last year. Vice Chairman Steve Girsky will give details of the European restructuring plans later Wednesday.
GM lost $478 million pretax in Europe, compared with a $292 million loss a year earlier. In North America, pretax profits fell 17 percent to $1.8 billion as lower pension income and higher costs for warranty claims offset lower raw material and freight costs.
But in South America, the company swung from a $44 million loss last year to a $114 million profit on the strength of new models. And GM’s international operations, fueled mainly by areas outside of China, nearly doubled its pretax profits to $689 million.