This morning, General Motors announced its financial earnings results for the third quarter of this year, ending September 2012. The automaker reported a net income of $1.5 billion, or $0.89 per fully diluted share, from net revenue of $37.6 billion.
The income is down $200 million compared to Q3 2011, when GM reported $1.7 billion in profit — or $1.03 per fully diluted share, while net revenue is up $900 million from $36.7 billion in 2011. Earnings before interest and tax (EBIT) adjusted was $2.3 billion compared with $2.2 billion a year ago.
GM was quick to note that the decreased profitability is related to the impact of special items, which reduced net income by 100 million and diluted earningsp er share by $0.04.
“GM had a solid quarter because customers around the world love our new vehicles and we’re also seeing green shoots take hold on tough issues like complexity reduction, pensions and Europe,” said Chairman and CEO Dan Akerson. “We are going to keep playing offense with growth products like the Chevrolet Onix, Opel Mokka and Cadillac ATS and continue to systematically address business risks.”
Senior Vice President and CFO Dan Ammann added, “While we still have a lot of work to do, especially in Europe, it is encouraging to see our results begin to reflect the discipline we are bringing to bear on the overall business.”
| Measurement/Timeframe | Q3 2012 | Q3 2011 |
|---|---|---|
| Revenue | $37.60 | $36.70 |
| Net income attributable to common stockholders | $1.50 | $1.70 |
| Earnings per share (EPS) fully diluted | $0.89 | $1.03 |
| Impact of special items on EPS fully diluted | $0.04 | |
| EBIT-adjusted | $2.30 | $2.20 |
| Automotive net cash flow from operating activities | $3.10 | $1.80 |
| Automotive free cash flow | $1.20 | $0.30 |
Q3 2012 Regional Results
- GM North America (GMNA) reported EBIT-adjusted of $1.8 billion compared with $2.2 billion a year ago.
- GM Europe (GME) reported an EBIT-adjusted of $(0.5) billion compared with $(0.3) billion a year ago.
- GM International Operations (GMIO) reported EBIT-adjusted of $0.7 billion compared with $0.4 billion a year ago.
- GM South America (GMSA) reported EBIT-adjusted of $0.1 billion compared with near breakeven results a year ago.
- GM Financial earnings before tax was $0.2 billion, up slightly compared with a year ago.
Pension De-Risking
GM is continuing to de-risk its pension obligations. Over the summer, about 30 percent of eligible U.S. salaried retirees accepted GM’s offer to receive a lump sum payment rather than ongoing pension benefits. The automaker expects to finalize its transition of remaining eligible U.S. salaried retirees to an annuity through The Prudential Insurance Company of America in early November.
In doing so, GM expects the move to eliminate nearly $29 billion of GM’s U.S. salaried pension liability, $3 billion more than the original estimate of $26 billion.
GM Europe Restructuring
Furthermore, GM expects to lose a total of $1.5 to $1.8 billion in Europe this year — depending on the level of restructuring during the fourth quarter. The automaker is projecting 2013 earnings for the region to be “slightly better” than in 2012, with break-even targeted by mid-decade.
Q4 Outlook
For the fourth quarter of 2012, GM expects its earnings to be similar to those seen during the same time period a year ago.
The GM Authority Take
Despite higher net revenues during the third quarter of this year compared to that of 2011, GM was slightly less profitable — a situation it attributes to the impact of a special item charge of $100 million. Given that The General has been on a profitability push, refusing to offer variants of popular models — such as the Chevy Cruze hatchback or the Chevy Trax — in the United States due to their potential to reduce net income, does anyone else find this ironic?
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