GM Expected to Post Profit in 3Q

[PontiacJ8]

GM Expected to Post Profit When It Reports 3Q Earnings, but Problems Persist in Europe
Tuesday October 12
By John Porretto, AP Auto Writer

DETROIT (AP) -- General Motors Corp. is expected to post a healthy profit rise when it reports third-quarter earnings Thursday, but its European business continues to falter and another severe overseas overhaul is likely.

In addition to releasing earnings for the July-September period, some analysts and industry observers say the world's largest automaker is likely to announce further restructuring -- including a massive job reduction -- in Europe, where GM has failed to record a profit since 1999.


During last month's Paris Auto Show, GM executives hinted that job cuts were inevitable as the company deals with overcapacity for building vehicles in Europe. "I think they've come to the conclusion they have to do something fairly drastic because they've got too much capacity in a tough market," said Burnham Securities analyst David Healy, who expects GM's European division to lose between $250 million and $300 million in 2004.



On Tuesday, the Financial Times said GM will cut almost 12,000 jobs in Europe, or one of every five of GM's workers there, to reduce costs by $500 million a year.

GM spokeswoman Toni Simonetti declined to comment on speculation about job losses but said "the environment is difficult in Europe for any full-line manufacturer" because of intense competition and pricing pressure, among other factors.

"We've got some challenges, and we've got to step up to them," Simonetti said.

In a report this week, Prudential Equity Group analyst Michael Bruynesteyn said he expects GM to earn $1.10 a share in the third quarter, up from 79 cents a share a year ago, despite a 4 percent decrease in North American vehicle production. Healy is forecasting earnings of $1 a share, 4 cents more than the current Wall Street consensus. GM's improvement, Bruynesteyn said, should come primarily from cost cutting in North America and improved business in the Latin America and Asia-Pacific regions. He forecasts earnings for GM's finance arm, which has contributed heavily to overall results in recent quarters, to amount to $625 million, about the same as a year ago but a big drop from $860 million in the second quarter of this year.

Full Story HERE

[marinerbc]

It wasn't all incentives; there must have been a lot more to it than that. It's great to see profitability, but GM Europe's woes seem to be here for a while yet.

All in all, great news regardless.

[ChevyLaxMan]

sometimes the european market seams like more trouble than it's worth

[Tiger]

Originally Posted by ChevyLaxMan

sometimes the european market seams like more trouble than it's worth

No doubt the taxes on vehicles sold there are! (Crazy!)

[marinerbc]

Originally Posted by laserwizard

Not bad from a company which has abandoned selling cars and has instead marketed its rebates first and sold cars secondarily.

Point taken.

You do what you have to, however. Get them into the cars first, then you have a much better shot at having them buy another.

Oh yes, and give us a real Caprice while you're at it. :p

[tgagneguam]

Originally Posted by laserwizard

Not bad from a company which has abandoned selling cars and has instead marketed its rebates first and sold cars secondarily.

Tell me about. I think they should follow Ford's lead and shrink to profitability. Oops, that isn't working either, and Ford seems to rely just as heavily on Ford Financial as GM does on GMAC. Oh well...

[desmo9]

The premise in the initial blurb is misleading, because GM's automotive business bled alot of money in the key regions of North America and Europe. It's only GMAC that overcame those losses and produced that "healthy profit" cited.

But the "headline" here implies a decent quarter for the automotive business, and that wasn't the case.