General Motors Posts $2 Billion Third-Quarter Profit
The latest snapshot of the company's financial health marks the third consecutive quarter the Detroit automaker has been profitable this year. Further, GM said it expects to turn a profit for the full year 2010 -- its first since 2004.
"We've arrived here because we continue to deliver on our major business objectives," said CEO Daniel Akerson, during a conference call following release of the earnings. "We've increased our global market share relative to the first quarter and on a year-to-date basis, we have sold more vehicles in the U.S. with four brands than we did last year with eight brands."
A Global Company
The bulk of the company's earnings of $2.3 billion before interest and taxes came from its North American operations. In its international operations, which include China, home to world's largest car market, GM reported earnings of $600 million before interest and taxes. In Europe, however, GM reported a loss of $600 million
Revenue in the third quarter was $34.1 billion, about $900 higher than in the second quarter, as the company saw its business improve in all of its markets worldwide, except Europe. GM delivered nearly 2.07 million vehicles during the 90 days ending September, slightly fewer than the 2.16 million it sold worldwide in the second quarter.
"GM's long term operating principle must be continuous improvement and innovation. They are on the right track but this is only be the beginning," said Jesse Toprak, senior analyst at TrueCar.com. "Once GM goes public, all eyes will be on the company -- not just American taxpayers, but investors worldwide."
IPO Is Coming
Last week, GM released details of its pending initial public offering, expected later this month. The company seeks to raise $13 billion by selling a combination of common and preferred shares of stock. The stock sale will result in the U.S. Treasury reducing its stake in GM to about 40% from its current 61%.
The automaker cited costs related to the introduction of new models, including the compact Chevrolet Cruze and electric-powered Volt, and increased engineering expense for the anticipated lower earnings. GM also expects to take a $700 million charge to purchase preferred shares held by the U.S. Treasury.
In his remarks Wednesday, Akerson said the company has made significant strides in lowering costs in North America and boosting its market share overseas in countries such as China, where GM has become the first automaker to sell 2 million cars in a single year.
"The company has focused on a clear and simple vision: design, build and sell the world's best vehicles," he said.
Still, Akerson said, much more remains to be done, including fixing GM's unprofitable business in Europe, remaining vigilant on reducing costs and doing a better job of marketing its brands to consumers.