GM reports $2 billion in third-quarter earnings
General Motors Co. posted its third consecutive profitable quarter Wednesday and is on track to have its first full-year profit since 2004.
The Detroit automaker’s announcement of a $2-billion profit comes just days before its public offering Nov. 18.
Bolstered by higher auto sales, GM reported that revenue rose 28% to $34.1 billion in the quarter. Earnings per share jumped $1.20, compared with a loss of 73 cents a share a year earlier, the company said.
“We have just started doing a better job marketing our brands to consumers,” GM Chief Executive Daniel F. Akerson said in a conference call with analysts. “We know we have much more work to do.”
A year ago, GM was fresh from bankruptcy protection. From 2005 to 2009, the automaker racked up about $88 billion in losses.
It emerged in June 2009 after the U.S. government bailed out the company and took a 61% stake through $50 billion in loans and stock purchases.
GM has since repaid taxpayers about $10 billion and hopes to pay back more after it floats a $13-billion public offering. It said the price of the shares would be $26 to $29, depending on investor demand for the stock.
The offering will reduce the government’s ownership to minority status, taking it to about 43% of the company. The offering will also trim the stakes of two other large shareholders, the United Auto Workers union and the Canadian government.
Jesse Toprak, an analyst at TrueCar, said the profitable third quarter should bode well for next week’s offering.
“A company’s stock value is only as good as a company’s earnings statement,” he said. “GM has shown that they’re in a strong position, and that should only improve as the economy continues to recover.”
GM’s profit was better than domestic rival Ford Motor Co., which reported a $1.7-billion third-quarter profit last month. It also surpassed Chrysler, which this week reported an $84-million net loss for the quarter.
Going into the fourth quarter, GM said it will incur costs as it rolls out new vehicles, such as the plug-in electric hybrid Chevrolet Volt and the compact sedan Chevrolet Cruze. Because of this, the automaker said its earnings before interest and tax would be significantly lower than the first three quarters.
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