GM Reports Loss; Merrill Profit Falls 77%
General Motors Corp. on Tuesday reported a smaller-than-expected loss for the third quarter as cost cuts tempered the effects of two summer strikes and an overseas sales slump.
The world’s largest auto maker said it lost $538 million, or 87 cents a share, before a charge, in the latest quarter, down from net income of $1.07 billion, or $1.34, a year ago. Analysts were expecting a loss of 99 cents, according to the average estimate of analysts in a First Call Corp. survey.
The 54-day strikes by the United Auto Workers at two Michigan parts plants cost GM $1.2 billion, or $1.89 a share, after taxes--less than first forecast because some lost production was recovered with overtime. The auto maker also lost $12 million outside North America, compared with earnings of $137 million a year ago, largely because of lower sales in Brazil.
GM’s U.S. market share plummeted to 24.2% during the quarter, down from 31.6% a year ago. But it rebounded in September to 30.5%.
GM Chairman Jack Smith said the auto maker is moving in the right direction for higher profit.
“As a result of our aggressive cost-reduction focus, strong sales of our new models, and the recent streamlining of our aggressive cost-reduction focus, we expect strong results in the fourth quarter,” Smith said.
Revenue fell 17% to $34.42 billion from an adjusted $40.16 billion in the third quarter, reflecting the $9.5 billion spinoff of its Hughes Electronics Corp. defense business last December.
The latest earnings figures exclude a charge for the shedding of GM’s Delphi seat, light and coil-spring business. The year-ago quarter had no gains or charges.
GM’s strike-battered North American operations lost $612 million in the third quarter, down from a profit of $423 million a year ago. Excluding the Delphi charge and the effects of the strike, GM North America would have earned $353 million.
The auto maker said it is on track to meet its $4-billion cost-cutting target for 1998.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
* Hertz Corp. said its third-quarter profit rose 27% to $118.7 million, or $1.09 a share, beating estimates of $1.05 a share, amid strong demand for its car and construction-equipment rentals. Revenue rose 11% to $1.23 billion.
* Host Marriott Corp. said its third-quarter net from operations rose 33% to $76 million, or 35 cents a share, meeting expectations, as a strong economy allowed it to raise room rates at its upscale hotels. Revenue rose 19% to $293 million.
* Media General Inc.’s third-quarter earnings rose 37% to $14.5 million, or 54 cents a diluted share, as strength in publishing and newsprint overcame declines in its broadcast and cable television results. Revenue rose 7% to $236.8 million.
