GM Posts $2-Billion Profit As It Returns to Public Trading Next Week

GM Posts $2-Billion Profit As It Returns to Public Trading Next Week

By Michelle Krebs November 10, 2010

General Motors Co. reported net income of $2 billion in the third quarter, its third consecutive profitable quarter and setting the automaker up for its first profitable full year since 2004.

These "solidly profitable results," GM CEO Dan Akerson said in a conference call this morning, will help "cap off a good first year for the new GM."

The results, in line with GM's guidance issued earlier this month, come as GM executives are traveling the globe trying to drum up investor interest in its initial public offering. GM's new stock begins trading Nov. 18.

GM also reported for the third quarter:

- Revenue of $34.1 billion. GM has shown a steady rise in revenues from $31.5 billion in the first quarter and $33.2 billion in the second quarter;

- Operating income of $1.9 billion, up from $1.2 billion in the first quarter and $1.8 billion in the second quarter;

- Earnings per share on a fully diluted basis and adjusted for a 3-for-1 stock split of $1.20, up from 55 cents a share in the first quarter and 85 cents in the second quarter;

- Earnings on an EBIT basis - before interest and tax - of $2.3 billion;

- Net cash flow from operations of $2.6 billion and, after adjusting for capital expenditures, $1.2 billion;

- Free cash flow of $1.4 billion, down from $2.8 billion in the second quarter but up from $1 billion in the first quarter.

Akerson highlighted the fact that GM has lowered its breakeven point significantly during the  bottom of the economic and auto-sales cycles. During the quarter, GM was No. 1 in market share for the combined BRIC countries of Brazil, Russia, India and China. And the company said it will be the first global automaker to sell 2 million vehicles in China this year.

Akerson attributed GM's results to its much-improved balance sheet, its vigilance in cutting costs and its "clear and simple vision" of designing, building and selling great vehicles. He acknowledged the automaker "just started doing a better job" on the marketing front.

But, he cautioned, much more needs to be done. Most notably: fixing the money-losing European operations, which prior to its bankruptcy GM attempted to sell, but later decided to keep.
 
GM Europe, as expected, posted a loss of $600 million, before interest and taxes, compared with a loss of $200 million in the second quarter. GM's troubled European operations likely are a top concern for investors company executives are trying to woo.

GM North America was profitable, earning $2.1 billion, up from $1.6 billion in the second quarter.

In total, GM's international operations posted a pre-interest and expense profit of $600 million, down from $700 million in the second quarter.

GM has said it expects to report positive pre-interest and expense EBIT earnings in the fourth quarter, albeit "at a significantly lower run rate than each of the first three quarters."

Nonetheless, the automaker expects to be profitable for the full 2010 calendar year. For the first nine months, GM has earned $4.2 billion.

In the previous four years, GM has racked up $82 billion in losses. The automaker emerged from government-imposed Chapter 11 bankruptcy in July, 2009.

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.