GM posts $2 billion profit

DETROIT - Strong profits on new cars and trucks helped General Motors Co. earn $2 billion in the third quarter, enhancing the company's appeal as it nears next week's initial public stock offering.

The third-quarter earnings of $1.20 a share nearly match what GM made in the first two quarters of this year combined, aided by profits from overseas and strong revenue from North America, the company said Wednesday. The strong quarterly results come barely a year after GM emerged from a bankruptcy that included a $50 billion rescue by the federal government. The company now has a leaner structure and sharply lower labor costs.

The earnings were boosted by higher prices from newly introduced models such as the Buick LaCrosse, a midsize luxury sedan.

"I think the results of the third quarter clearly point to the amount of progress that GM has made," GM chief executive officer Dan Akerson said in a conference call with analysts and media. He said GM was on track to make 2010 its first profitable year since 2004.

The results were another indication of a widespread recovery among global automakers. Toyota Motor Corp., Honda Motor Co. Ltd., Nissan Motor Co. Ltd., Chrysler Group L.L.C., and Ford Motor Co. all reported improved results in the most recent quarter as auto sales slowly increased.

It was the third straight profitable quarter for GM.

The automaker has repaid or plans to repay taxpayers $9.5 billion, and the government hopes to get back the remaining $40 billion with the Nov. 18 common stock offering and several follow-up sales.

In its presentations to potential investors in the IPO, the automaker is emphasizing its presence in Brazil, Russia, India, and China. GM says it has a 13 percent consolidated market share in the BRIC markets.

The latest quarterly results compare with a $908 million loss, or 73 cents a share, in the third quarter of last year, a short quarter for GM because it spent the first nine days still in bankruptcy protection.

The Detroit automaker posted $34.1 billion in revenue for the July-to-September quarter, up 35 percent from the $25.1 billion in the shortened period a year earlier.

Revenue has been steadily increasing this year, largely because of gains in North America and explosive sales growth in China.

For the quarter, GM reported strong profits in all of its regions but Europe, where it lost $559 million. The company reported $2.1 billion in profit from North America, and its international operations, including Asia and Latin America, made $646 million.

GM said better pricing in North America contributed $600 million to its bottom line.

The company has cut back on costly incentives and is earning more per vehicle on some new products.

In an Internet presentation for potential investors last week, GM said it was making $7,500 more per car for the 2011 Buick LaCrosse compared with the previous model. LaCrosse sales have more than doubled this year.

The earnings per share figure for the quarter was adjusted for a three-for-one stock split approved by GM's board last week in advance of the initial public offering.

The third-quarter earnings come in the middle of a two-week "road show" in which GM executives are fanning out to U.S. and European money centers to sell investors on the upcoming IPO. The positive third-quarter performance should help them make their case.

Key figures from GM's third-quarter report.*

Revenue: $34.1 billion, up 36 percent from last year's quarter

Earnings: $2.0 billion compared with a loss of $908 million a year earlier

Global market share: 11.5 percent, down from 11.9 percent

U.S. market share: 18.3 percent, down from 19.4 percent

Employees, worldwide: 209,000, down 6,000 from the end of 2009

U.S. vehicle sales: 558,000 compared with 593,000 a year earlier

*The 2009 third quarter had nine fewer days than this year because GM was still in bankruptcy then

SOURCE: General Motors Co.

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