Global Biz
GM reports $1.2B loss, says it shows progress
(Agencies)
Updated: 2009-11-17 02:51
GM maintains the numbers show a company making progress, riding dramatically reduced structural costs to a far better performance than the $6 billion loss GM reported in the first quarter, the last full quarter for which its numbers met accounting standards.
GM took in $3.3 billion more cash than it spent for the third quarter, far better than the $10 billion the company burned through during the first quarter.
Its third-quarter revenue totaled $26.4 billion, an improvement over the first quarter when its revenue dropped almost 50 percent to $22.4 billion from a year earlier. Revenue was aided by sales boosts in July and August from the US government's Cash for Clunkers rebates.
GM said its global market share was 11.9 percent in the third quarter, up three percentage points from the first half of the year. The US share stayed flat for the quarter at 19.5 percent.
Young said GM accountants are in the process of cleaning up the new company's books, revaluing assets and liabilities and changes to pension and health care costs that came from bankruptcy and a new contract with the United Auto Workers union.
GM expects to meet accounting standards when it reports full-year results for fiscal 2009, but those figures probably won't be released until March.
GM lost $78 billion from 2006 through the first quarter of this year. The gargantuan losses and debt eventually left the company unable to operate without government help.
GM entered bankruptcy protection with roughly $94.7 billion in debt. It emerged with $17 billion, including the $6.7 billion owed to the US government. The government has given GM a total of $52 billion, including $45.3 billion in exchange for a 61 percent equity stake in the company.
Young said the government placed $16.4 billion of GM's loan money into a contingency fund in case sales worsened or other problems cropped up. Now, GM doesn't need the contingency money and can repay it to the government, he said.
But Henderson said GM felt it was prudent not to repay the whole amount in December, in case conditions change.
The automaker also says it will begin repaying $1.4 billion it owes to the Canadian and Ontario governments in December. GM also has paid $700 million on a $1.3 billion loan from the German government to keep GM's Opel division in operation. The balance will be repaid this month, GM said.
Hendersonsaid a "reasonably large" part of the Opel repayment came from GM's US-generated funds, while some came from Opel funds. He said GM is a global company and needs to have flexibility to use the money to run global operations.
The CEO disagreed with a report by the General Accounting Office saying that it was doubtful the US government would recoup all the money given to GM. He said full repayment is a function of stock value, and he intends to make the stock valuable by managing the company well.
"It is my mission to disprove the GAO," Henderson said.
Although GM reported positive cash flow for the third quarter, it does not expect that to continue into the fourth quarter because of the government loan repayments and a $2.8 billion payment to help Delphi Corp., its former parts division, out of bankruptcy protection.
GM has said it plans to sell stock to the public late next year so taxpayers can recoup at least part of their remaining investment. Henderson said they'll be ready for next year, but the timing of a sale depends on capital markets and the company's performance.
