The North American automotive industry is experiencing a turnaround, and General Motors is no exception. Reuters reports that GM recorded $2 billion in profits for the third-quarter, with an earnings per share increase of $1.20. This turn of success has spurred the recently bankrupt automaker toward an initial public offering of stock by next week.
GM $2 billion 3Q profit largest since bankruptcy
Since emerging from bankruptcy in July 2009, $2 billion in profits is the most successful quarter GM has had. Lower operating costs and a reduced dependency upon sales incentives have helped the profit margin. Recent results certainly put a good shine on the automaker’s upcoming $13 billion IPO. The company predicts that 2010 as a whole will be profitable, the first time it has produced such results since 2004, writes Reuters.
The third quarter of 2010 is the third consecutive quarter in which GM has increased cash earnings in North America. International sales have been flat, however, and GM has seen some significant losses in Europe that have the attention of GM CEO Dan Akerson.
“We still need to fix Europe,” he said in a statement. “We continue to be vigilant in reducing cost in the enterprise, and we have just started doing a better job in marketing our brands to consumers.”
The investor road show is under way
Slashing costs and setting up Europe for future growth are major elements of the sales pitch GM executives are offering to investors on the eve of the automaker’s IPO. Common and preferred shares will be offered, which will enable the U.S. Treasury to cut its stake in the company from 61 percent down to 43 percent.
What’s in store for quarter four
GM’s fourth quarter should prove to be productive, as the Chevrolet Cruze compact will be introduced to compete against the Honda Civic and Toyota Corolla. The lift the Cruze is projected to bring to GM should enable it to keep its spot as the top-earning U.S. automaker, writes Reuters. In the third quarter, Ford was the closest rival at $1.7 billion in profits, while at the other end of the scale, Chrysler posted an $84 million net loss.
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ABC News (Reuters)
FOX Business coverage of GM 3Q profit