GM loses 41 cents a share in 3Q but still beats expectations

Automaker is helped by `strong sales' in North America

October 19, 2001|By Ted Shelsby | Ted Shelsby,SUN STAFF

General Motors Corp. reported yesterday a third-quarter loss of $368 million, or 41 cents a share, but still beat analysts' expectations.

The loss compared with a profit of $829 million, equal to $1.55 a share, in last year's third quarter.

After factoring out one-time charges of $753 million, or $1.26 a share, related to the closing of an assembly plant in Canada and the settlement of a legal dispute at its Hughes Electronics unit, GM would have earned a profit of $385 million, or 85 cents a share. That beat the analyst consensus forecast of 80 cents a share. Sales totaled $42.5 billion, down slightly from $42.7 billion in the third quarter last year.

"They did a little better during the quarter than Wall Street expected," said David Healy, an analyst with Burnham Securities. Analysts were forecasting earnings of 80 cents a share for the quarter just ended.

Healy warned, however, that GM faces a rocky road in the fourth quarter and in the year ahead.

The company conceded as much when it said that fourth-quarter North American vehicle production would drop 7 percent below output in the same period last year. As a result, it predicted that final quarter earnings would equal 50 cents a share. Analysts were forecasting 71 cents a share.

Healy said the company also will "take a big hit" in its rental car business during the fourth quarter as sales to rental fleets decline as a result of the sharp drop in air travel because of the Sept. 11 terrorist attacks.

Healy said that John M. Devine, GM's chief financial officer, has warned that the weak stock market has reduced the value of the company's pension fund by about 8 percent, which could result in a charge against earnings of $1.30 to $1.80 a share next year.

The analyst said that GM's North American operations, which account for about half the company's total business, did better than many expected.

G. Richard Wagoner, GM's president and chief executive, said: "North America finished the quarter with particularly strong sales."

GM's North American operations earned $445 million in the quarter, after excluding the charge of $194 million for the closing of an assembly plant in Quebec. This compares with $728 earned in the third quarter of last year.

The company blamed tough price competition for the $287 million loss posted by its European auto operations.

The Asian Pacific market reported a $60 million profit, up from $10 million in the third quarter of 2000.

General Motors has two manufacturing plants in the Baltimore region, an assembly plant in Southeast Baltimore and a transmission plant in White Marsh

Shares of GM lost 75 cents yesterday to close at $42.02.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.