General Motors Company
) posted a 9.7% fall in earnings to 93 cents per share (excluding
special items) in the third quarter of the year from $1.03 in the
corresponding quarter a year ago. However, earnings per share in
the quarter far exceeded the Zacks Consensus Estimate of 61
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GENERAL MOTORS (GM): Free Stock Analysis
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Total profit ebbed 5.9% to $1.6 billion from $1.7 billion a year
ago. The decline in profit was attributable to lower profits from
North America and increased loss in Europe.
Revenues in the quarter grew 2.5% to $37.6 billion, surpassing
the Zacks Consensus Estimate of $36.3 billion. Worldwide sales
volume inched up 1.6% to 2.3 million units from 2.2 million units
a year ago. However, total market share declined to 11.6% from
12.1% in the third quarter of 2011.
Operating income fell 11.2% to $1.6 billion from $1.8 billion a
year ago. However, adjusted earnings before interest and tax
(EBIT) rose 4.5% to $2.3 billion from $2.2 billion a year ago.
GM North America (GMNA) reported a 6.7% rise in revenues to $23.3
billion during the quarter. Adjusted EBIT decreased 17.0% to $1.8
billion from $2.2 billion in the third quarter of 2011.
GM Europe (GME) saw a 17.7% fall in revenues to $5.1 billion. The
segment reported a broader adjusted loss before interest and tax
of $478 million compared with $292 million in the year-ago
For the full year 2012, the company expects adjusted loss in the
region between $1.5 billion and $1.8 billion, depending on the
extent of restructuring activity in the fourth quarter. In
addition, the company aims to achieve 2013 adjusted EBIT in the
region that is slightly higher than 2012.
GM International Operations (GMIO) reported a 10.3% rise in
revenues to $6.7 billion. Adjusted EBIT shot up 88.8% to $689
million compared with $365 million in the comparable quarter of
GM South America (GMSA) witnessed a 1.7% decline in revenues to
$4.3 billion. The segment had adjusted EBIT of $114 million in
the quarter compared with a loss of $44 million in the third
quarter of 2011.
GM Financial reported a 31.5% rise in revenues to $514 million
during the quarter. EBIT in the segment improved 12.4% to $200
million from $178 million in the year-ago quarter.
GM had cash and cash equivalents of $23.3 billion as of September
30, 2012, up from $16.1 billion at the end of 2011. Total debt
increased to $16.7 billion as of the above date from $13.8
billion as of December 31, 2011. Consequently,
debt-to-capitalization ratio rose to 28.6% from 26.6% in the
In the first nine months of 2012, the company had a cash flow of
$9.1 billion from operating activities, up from $6.2 billion in
the same period a year ago. Meanwhile, capital expenditures rose
to $6.0 billion from $4.1 billion in the 2011-period. This
translated into free cash flow of $3.2 billion during the period,
up from $2.1 billion in the first nine months of 2011.
GM is a leading global automotive company. The company has
presence in almost 120 countries and has facilities located in 31
countries. It had to seek bankruptcy protection in 2009 due to
unfavorable economic conditions and a rapid decline in sales.
However, the automaker recouped its sales and earnings by banking
on the emerging markets and improved cost structure.
However, due to its significant exposure to troubled Europe and
the global economic weakness, the company currently retains a
Zacks #3 Rank on its stock, which translates to a short-term
rating of Hold.
GM's hometown rival
Ford Motor Co.
) fared well compared with the company during the quarter under
review. Ford posted a 17.6% rise in earnings per share to 40
cents in the third quarter of the year from 34 cents a year ago
driven by impressive results in its North American operation and,
to some extent, its Asian operation. With this, the company has
also beaten the Zacks Consensus Estimate by 10 cents per share.
Total profit rose 15.6% to $1.6 billion from $1.4 billion a year