GM posts lower third-quarter profit
General Motors Co. saw its profit slide in the third quarter, hurt by losses in Europe and a slowing global economy.
Although the nation’s largest automaker has posted a string of seven consecutive profitable quarters, its earnings in the latest period fell 15% to $1.7 billion, or $1.03 per share, from $2 billion, or $1.20 a share, in the same period last year.
Revenue rose 7.6% to $36.7 billion.
“We produced a solid quarter generating our best results in North America and China, the world’s most important auto markets and where GM is a market leader,” said Dan Akerson, GM’s chief executive. “We have a lot more work to do, especially in Europe, which is being hurt by challenging economic conditions, and in South America.”
Akerson also said seasonal factors, economic uncertainty in Europe and fewer new vehicle introductions this year would hurt the fourth-quarter outlook.
GM is rebounding from a bankruptcy reorganization and federal government bailout in 2009. On a fully diluted basis, which accounts for stock options and warrants in the marketplace not yet exercised, taxpayers still own about 27% of the automaker.
“Europe was clearly the big disappointment,” said Matt Collins, an analyst with Edward Jones. “The weak demand there is out of GM’s control, but they’ll have to aggressively manage the business to stay above water.”
He said Ford Motor Co., which two weeks ago said its third-quarter earnings fell 2% to $1.6 billion, “didn’t fare better much in Europe, so GM isn’t alone. The entire industry is likely to struggle there until Europe gets its house in order.”
And with the news, GM’s shares fell $2.73, or 10.9%, to $22.31. The stock is almost $10 off its initial offering price of $33 in November 2010, when it started trading after the automaker’s financial restructuring.
GM’s market share grew to 20.1% in the third quarter, up from 18.6% a year earlier, according to auto information company Edmunds.com.
Part of the gain came from the supply crunch suffered by the big Japanese automakers after that nation’s earthquake in March.
But it’s not clear how long that advantage will last.
“But with their Japanese competitors reemerging, GM will have a tougher fight on their hands in the coming months against refreshed and redesigned offerings like the Toyota Camry and Honda Civic,” said Jessica Caldwell, an Edmunds.com analyst.
