May 27, 2024

G.M. Earnings, Like Its Rivals, Are Hurt by Europe

G.M. reported that its net income for the quarter was $1.48 billion, down from $1.73 billion in the same period last year. The company said global revenue increased to $37.6 billion, up from $36.7 billion in the third quarter of 2011.

Like many other automakers, G.M.’s losses broadened in the troubled European market. The company said its pretax loss in the region was about $500 million compared to about a loss of about $300 million a year ago.

Pretax income from G.M.’s North American operations also declined during the quarter to $1.8 billion, down from $2.2 billion last year.

The automaker’s chief executive, Daniel Akerson, called the quarter “solid” and said the company was gaining traction with new vehicles while addressing financial challenges, like pension costs.

“G.M. had a solid quarter because customers around the world love our new vehicles and we’re also seeing green shoots take hold on tough issues like complexity reduction, pensions and Europe,” Mr. Akerson said in a statement.

G.M. also said that about 30 percent of eligible salaried retirees in the United States had elected to take lump-sum payments in exchange for giving up regular pension benefits. Ongoing pension obligations for the rest of the company’s salaried retirees in the United States will be transferred to Prudential Insurance next month, G.M. said.

The company said it would take a $2.9 billion pretax charge in the fourth quarter in connection with the pension changes.

G.M. gave no new details on how it would turn around its European operations, which are now on track to post a pretax loss of $1.5 billion to $1.8 billion for the full year.

Ford Motor Company, G.M.’s Detroit rival, last week said it would close three plants in Europe and eliminate 5,700 factory jobs in an effort to revitalize its European business.

G.M.’s chief financial officer, Dan Ammann, said in a statement that the company is working to improve its European unit, where plants are operating at well below capacity because of the sharp downturn in vehicle sales in the region. G.M. is also conducting a search for a new chief executive of the European business.

“While we still have a lot of work to do, especially in Europe, it is encouraging to see our results begin to reflect the discipline we are bringing to bear on the overall business,” Mr. Ammann said.

G.M.’s other overseas operations fared better than Europe. The company said its international unit, which is anchored by its large Chinese business, earned pretax income of about $700 million compared with $400 million last year. Its South American division reported pretax income of about $100 million, up from break-even in 2011.

G.M.’s share of its core American market has dropped since last year, primarily because of the resurgence of Japanese automakers that were constrained by inventory shortages in 2011 from the earthquake and tsunami in Japan.

In the first nine months of this year, G.M. had an 18.1 percent market share in the United States compared with 20 percent during the same period a year ago, according to the research firm Autodata.

One analyst said the company’s third-quarter performance was consistent with industry trends, particularly its troubles in Europe. “G.M.’s global performance is hardly out of line with any other automaker, whether it’s the company’s strength in the North American market or its weakness in the European market,” said Jessica Caldwell, an analyst with the auto research company Edmunds.com.

Article source: http://www.nytimes.com/2012/11/01/business/gm-earnings-like-its-rivals-are-hurt-by-europe.html?partner=rss&emc=rss