GM posts improved quarterly results, increases its cash reserves
After a long, painful drain on the corporate piggy bank, General Motors Corp. is actually saving money once again. The bailed-out automaker today announced its first quarterly results since emerging from bankruptcy, highlighted by the fact that it was able to increase its cash reserves by $3.3 billion in the period.
Of course, it still posted a $1.15-billion loss in the third quarter, but for a company that's had as bad a year as GM, that's a marked improvement.
GM executives said the company would be able to begin repaying loans extended to it by the federal government as well as the governments of Canada and Germany. Next month, the automaker will make a $1.2-billion loan repayment, officials said.
“We have significantly more work to do, but today’s results provide evidence of the solid foundation we’re building for the new GM," said Fritz Henderson, the automaker's chief executive and president.
For the quarter, which included the tail end of GM's sprint through bankruptcy, revenue was $28 billion, down significantly from a year earlier when it brought in $37.9 billion and had a net loss of $2.5 billion. But GM hastened to point out that the latest figure was an improvement from the second quarter of this year, when revenue was $21 billion.
In North America, GM lost $651 million on operations, while its international units collectively earned $238 million for the period. Henderson and other GM officials attempted to cast the quarterly results in a positive light, indicating that they expected auto sales to gradually improve over the next year, putting the Detroit company on track for an initial stock offering in the first half of 2010.
But GM was clearly outperformed by the competition. Earlier this month, Ford Motor Co. posted a $1-billion profit for the quarter, while Toyota Motor Corp., in an earnings surprise, reported profit of $240 million.
Looking forward, GM said it expected the fourth quarter to be a bit tougher, with negative cash flow as it repaid loans. The automaker reported $17 billion in outstanding debt, compared with the almost $95 billion it had when it filed for Chapter 11 bankruptcy protection in June.
Of that, roughly $6.7 billion is owed the federal government, with the majority of the $50 billion in loans it was extended either forgiven or converted into equity in the company. Two weeks ago, GM announced that it had decided to keep its European Opel division rather than sell it to a consortium led by a Canadian parts maker. As a result, GM will have to repay a $1.4-billion loan by the German government to Opel.
-- Ken Bensinger
Photo: GM Chief Executive Fritz Henderson. Credit: General Motors Co.