GM sees European operations breaking even by mid-decade

Wed Oct 31, 2012 2:57pm EDT
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By Ben Klayman

DETROIT (Reuters) - General Motors Co posted a surprisingly strong profit on Wednesday on higher sales and vehicle prices, mainly in the United States, and said it was targeting a return to break-even levels in its European operations by mid-decade.

Shares of the automaker rose more than 10 percent as investors welcomed better-than-expected results in North America, South America and the International unit that includes China, as well as a more defined roadmap for ending its European losses. GM's stock debuted at $33 a share when it re-entered the market in the fall 2010.

Higher sales volumes and vehicle prices contributed $900 million to the quarter.

"We're getting a nice confirmation of good news," Citi analyst Itay Michaeli said. "We're getting more confirmation of the strength of the North America story; we're getting at least some light at the end of the tunnel with respect to Europe and the Asia-China story is still humming along."

GM's third-quarter net income attributable to common shareholders fell to $1.48 billion, or 89 cents a share, from $1.74 billion, or $1.03 a share, a year earlier. On Tuesday, smaller U.S. rival Ford Motor Co reported a far higher-than-expected profit of $1.63 billion for the quarter.

Excluding one-time items, GM earned 93 cents a share, well above the analysts' average estimate of 60 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 2.4 percent from last year to $37.6 billion, above the $35.7 billion analysts had expected.

In Europe, however, GM said it expected a full-year operating loss of $1.5 billion to $1.8 billion, depending on the level of restructuring that occurs in the fourth quarter. Last year, it lost $747 million in the region.   Continued...

The General Motors logo is seen outside its headquarters at the Renaissance Center in Detroit, Michigan August 25, 2009. REUTERS/Jeff Kowalsky