Copyright Bill Pugliano, Getty Images

GM Earnings Drop 14%

Oct. 23, 2014
Earnings at GM, the biggest U.S .automaker, fell 14.3% from the year-ago period to $1.47 billion as the company reported operating losses in both Europe and South America.

NEW YORK -- General Motors (IW 500/5) Thursday reported lower third-quarter earnings on weakness in some international markets, but showed signs of emerging from a costly ignition-recall scandal.

Earnings at GM, the biggest U.S. automaker, fell 14.3% from the year-ago period to $1.47 billion as the company reported operating losses in both Europe and South America.

But GM reported higher operating earnings in North America, where sales of the automaker's recently launched sports utility vehicles have soared amid lower gasoline prices.

GM also announced no fresh financial hit from recalls announced in the wake of the faulty ignition scandal. Charges totaling $2.5 billion to cover recalls weighed on earnings in the prior two quarters.

"Strong global sales and growing margins in North America and China helped GM deliver very solid third-quarter results," said GM chief executive Mary Barra.

"Despite industry challenges in Russia and South America, our earnings were on plan as we continue to execute our customer-focused strategy."

Currency Headwinds

Operating earnings rose 12.1% in North America to $2.45 billion. Vehicle deliveries jumped 12.8% amid brisk industry-wide sales in the giant US market.

Barra cited particularly strong sales in pickup trucks and SUVs following recent launches of the GMC Canyon and other vehicles that are expected to generate further gains in the fourth quarter as the products become more widely available.

GM's also reported positive earnings and strong sales in its international unit that includes China. Deliveries in the booming Chinese market soared 14.1% higher from the year-ago period to 850,000.

But GM's loss deepened in Europe, where consumer spending remains meager amid lackluster economic growth. The auto giant also took a $200 million asset-impairment charge in Russia as it trimmed staff and cut factory capacity to deal with reduced demand following the ruble's devaluation.

The South America division notched a $32 million loss compared with a $284 million gain in the year-ago period. Sales in Venezuela have fallen sharply due to a currency devaluation, while deliveries in Brazil have dropped in a weaker economy.

Still, the loss in South America was smaller than in the third quarter. Chief financial officer Chuck Stevens said South America should see "continued improvement" in the fourth quarter.

GM expects "significant improvement" in 2015 in Europe, Stevens added. The automaker has said its European segment will return to profitability in 2016.

In terms of the recall, Barra said GM has repaired more than 1.2 million vehicles affected by the ignition-switch problem.

She said the company was stepping up outreach to the remaining population of affected consumers now that GM has obtained all the necessary equipment to complete the repairs. GM recalled some 2.6 million cars in February to address the ignition-switch problem, which has caused at least 29 fatalities.

The automaker has recalled nearly 30 million vehicles in all in 2014, but most of the remaining recalls have been for safety problems other than the ignition-switch issue.

GM's results translated into earnings per share of 97 cents, excluding special charges. That was two cents above analyst expectations.

Revenues rose 0.6 percent to $39.26 billion, slightly below the $39.52 billion projected by analysts.

- John Biers, AFP

Copyright Agence France-Presse, 2014

Popular Sponsored Recommendations

Global Supply Chain Readiness Report: The Pandemic and Beyond

Sept. 23, 2022
Jabil and IndustryWeek look into how manufacturers are responding to supply chain woes.

Empowering the Modern Workforce: The Power of Connected Worker Technologies

March 1, 2024
Explore real-world strategies to boost worker safety, collaboration, training, and productivity in manufacturing. Emphasizing Industry 4.0, we'll discuss digitalization and automation...

How Manufacturers Can Optimize Operations with Weather Intelligence

Nov. 2, 2023
The bad news? Severe weather has emerged as one of the biggest threats to continuity and safety in manufacturing. The good news? The intelligence solutions that build weather ...

How Organizations Connect and Engage with Frontline Workers

June 14, 2023
Nearly 80% of the 2.7 billion workers across manufacturing, construction, healthcare, transportation, agriculture, hospitality, and education are frontline. Learn best practices...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!