Latest Car News From DIGIADS

Latest Car News

New Car Review Areas

General Car Topics

GM Reports $1.6 Billion Loss Q3


October 2005
 Filed under: GENERAL MOTORS CORPORATE Car News | GENERAL MOTORS CORPORATE Headlines

GM Reports Third-Quarter Financial Results

DETROIT – General Motors Corp. (NYSE: GM) today reported a loss of $1.1 billion, or $1.92 per diluted share, in the third quarter of 2005, excluding special items and a tax-rate adjustment. These results compare with net income of $315 million, or $0.56 per share, in the third quarter of 2004. Revenue rose more than 5 percent to $47.2 billion.
Including special items, GM reported a loss of $1.6 billion, or $2.89 per share in the third quarter of 2005. The special items include a non-cash charge of $805 million for asset impairments primarily in North America and Europe and restructuring charges at GM Europe of $56 million. These were partially offset by a tax-rate normalization totaling $311 million.

"Today we are announcing a significant update on our plan to address our health-care burden, which is the cornerstone of our efforts to reduce structural costs by a $5 bill ion run rate by the end next year, ” GM Chairman and Chief Executive Officer Rick Wagoner said. “These actions represent an acceleration of the pace and scope of our North American turnaround plan”.

GM financial results described throughout the remainder of this release exclude special items unless otherwise noted. See Highlights for reconciliation of adjusted results to results based on Generally Accepted Accounting Principles (GAAP).

GM Automotive Operations

GM’s global-automotive operations reported a loss of $1.6 billion in the third quarter of 2005, as profitable results in GM’s Asia-Pacific and Latin America/Africa/Mid-East regions were more than offset by losses in North America and Europe. GM's global-automotive operations lost $219 million in the prior-year period.

GM's global market share was 14.6 percent in the third quarter of 2005, compared with 15.4 percent in the year-ago period. Through the first nine months of 2005, GM sold more than 7 million vehicles worldwide, up 3.7 percent, with market share gains in three out of four business regions. Through September, GM’s global market share was 14.4 percent compared to 14.5 percent a year ago.

“Our global brands – Chevrolet, Hummer, Saab and Cadillac – continue to grow around the world; we have plans to further leverage these strong brands as we expand and update their product line-ups,” Wagoner said. “So far this year, Chevrolet sold nearly 3.4 million cars and trucks, accounting for 1 out of every 14 vehicles sold in the industry worldwide, and Cadillac, Hummer and Saab also continue to increase sales volumes.”

GM North America (GMNA) reported a loss of $1.6 billion in the third quarter of 2005, compared with a loss of $88 million a year ago. Results were adversely affected by lower production volumes, continued increases in health care costs, higher material costs, and a shift in vehicle mix away from full-sized sport utility vehicles. The year-ago period also included a favorable one-time adjustment for product-liability reserves.

GM’s market share in North America was 25.6 percent in the third quarter of 2005, compared with 28.5 percent a year ago. Dealer inventories ended the quarter at 818,000 units, down 319,000 units or 28 percent, from the year-ago period. Through the first nine months of 2005, GM’s market share in North America was 26.1 percent, compared with 27 percent in the year-ago period.

“We’re confident that we have the right product plan in place to improve our performance in North America,” Wagoner said. “GM is introducing a broader range of new vehicles this year and next, including a number of crossover vehicles and hybrids. And our new full-sized sport utilities due out soon will feature substantial improvements in fuel economy along with new and emotionally compelling designs and best-in-class interiors.”

GM’s launch vehicles continue to gain momentum in the market. Sales of the Chevy HHR are off to a strong start, particularly in important markets like Houston, Dallas and the West Coast. The Pontiac G6 had its best sales ever in September, and the Chevrolet Cobalt, Buick LaCrosse, Cadillac DTS, Hummer H3 and Chevrolet Impala all continue to do well.

GM Europe (GME) reported a loss of $150 million in the third quarter of 2005, compared with a loss of $236 million in the year-ago quarter, as continued improvement in structural and material costs more than offset lower production volumes and higher start-up costs associated with the launch of the new Opel Zafira and redesigned Vectra/Signum family. GM’s market share was down slightly in the third quarter of 2005 to 9.3 percent, but for the first nine months of 2005, GM’s market share in Europe was up slightly to 9.6 percent.

“GM Europe is making significant and necessary progress improving its productivity and strengthening its overall competitiveness,” Wagoner said. “We recently introduced the Chevrolet brand across Europe with products that are especially competitive in key growth segments. The good news is that Chevy sales are up 27 percent so far this year in Europe. Looking ahead, we’re optimistic about the prospects for all of our brands, as we see strong dealer orders for new entries such as the Saab 9-3 SportCombi, the Opel/Vauxhall Zafira and the Chevrolet Matiz.”

GM Asia Pacific (GMAP) earned $176 million in the third quarter of 2005, more than double the $78 million earned in the year-ago quarter. GM’s market share in the Asia-Pacific region rose to 5.9 percent in the third quarter from 5.1 percent a year ago, led by gains in China and Thailand.

"We had a strong quarter in the Asia-Pacific region. Our growth strategy in China continues to gain momentum as we expand our product offerings,” Wagoner said. “With sales up 160 percent this year, Cadillac is proving to be a strong complement to the successful Buick and Chevrolet brands in China. And GM D aewoo continues to increase its worldwide sales volumes with gains in both the domestic and export markets.

GM's market share in China rose 2.6 percentage points in the third quarter of 2005 to 11.7 percent and in Thailand, GM’s market share rose 1.4 percentage points to 5.3 percent.

On Oct. 11, 2005, GM completed the sale of its 20 percent equity interest in Fuji Heavy Industries (FHI). As a result, GM will recognize c ash proceeds of approximately $800 million in the fourth quarter of 2005 and report a gain of approximately $70 million in the same period. GM revised its second-quarter 2005 results to include a $788 million write-down associated with the reduced carrying value of the FHI investment.

GM Latin America / Africa /Mid-East (GMLAAM) earned $25 million in the third quarter of 2005, compared with net income of $27 million a year ago. The results reflect strong improvements in revenue and profitability in most countries in the region, slightly offset by the unfavorable effect of a strengthening currency on export profitability in Brazil.

“GM’s sales volume in the LAAM region rose 20 percent in the quarter to a record 223,000 vehicles, with gains in Argentina, Brazil, Venezuela and South Africa,” Wagoner said. “We expect record industry sales in the LAAM region this year, surpassing the previous record of 4.4 million sales in 1997.”

GM’s market share in the LAAM region rose to 17.5 percent in the third quarter of 2005 from 17.2 percent a year ago.

GMAC

General Motors Acceptance Corp. (GMAC) reported record third-quarter net income of $675 million, up from $620 million in the third quarter of 2004, as strong results from mortgage operations more than offset lower earnings from financing and a modest decline in insurance earnings. In addition, losses from Hurricane Katrina reduced GMAC’s third-quarter earnings by approximately $161 million, with the majority related to credit losses in GMAC’s auto-finance and mortgage-lending businesses, with less significant losses in the insurance business.

“Despite losses from Hurricane Katrina and higher funding costs, GMAC had another strong quarter, with record third-quarter net income and strong liquidity,” Wagoner said. “This is particularly impressive in light of GMAC’s challenging funding environment.”

GM also indicated today in a separate announcement that the company is exploring options to further enhance GMAC’s liquidity position and its ability to support GM/GMAC synergies.

“These potential actions are intended to restore GMAC’s investment-grade credit rating and to renew its access to low-cost funding,” Wagoner said. “In addition, these actions are designed to preserve and to grow the synergies between GM and GMAC, especially cost-effective auto financing, and sustaining GMAC’s diversified earnings growth.”

GMAC's financing operations earned $178 million in the third quarter of 2005, down from $259 million a year ago, reflecting the unfavorable effect of financing losses related to Hurricane Katrina and lower net interest margins as a result of increased borrowing costs. These factors were somewhat offset by improved used vehicle prices on terminating leases and favorable consumer credit provisions primarily as a result of lower asset levels in the third quarter of 2005.

Mortgage operations earned a record $408 million in the third quarter of 2005, up from the $266 million in the third quarter of 2004. GMAC’s residential mortgage businesses benefited from increased gains on sales of mortgages as well as certain investment securities. In addition, improved servicing results, net of hedging activities, contributed to the increase in third-quarter earnings. GMAC’s commercial mortgage business also experienced an increase in third-quarter earnings largely due to increases in fee and investment income. In August 2005, GMAC entered into a definitive agreement to sell a 60-percent interest in the commercial mortgage business. The transaction, which would protect its investment grade credit rating and enable GMAC to achieve superior returns, is on track to close around year-end.

Insurance operations reported earnings of $89 million in the third quarter of 2005, down from $95 million in the third quarter of 2004. Strong net underwriting revenue and favorable non-weather related loss experience was somewhat offset by increased reserves for insurance losses related to Hurricane Katrina.

GMAC continued to maintain strong liquidity, with a total of $24.3 billion in cash and certain marketable securities as of Sept. 30, 2005. GMAC also provided a significant source of cash flow to GM through the payment of a $500 million dividend in the third quarter, bringing total year to date dividends paid to its parent to $1.5 billion. GMAC continues to expect net income in excess of $2.5 billion for the full year while continuing to be a significant contributor to GM’s cash flow with expected dividends to GM in excess of $2 billion in 2005.

Cash and Liquidity

Cash, marketable securities, and readily available assets of the Voluntary Employees’ Beneficiary Association (VEBA) trust, excluding financing and insurance operations, totaled $19.2 billion at Sept. 30, 2005, down from $20.2 billion on June 30, 2005. In the third quarter of 2005, GM withdrew $1 billion from the VEBA trust to pay for retiree health care, and on Oct. 3, 2005, GM withdrew an additional $1 billion.

In this press release and in related comments by General Motors management, our use of the words “expect”, “anticipate”, “design”, “estimate”, “forecast”, “initiative”, “objective”, “plan”, “goal”, “project”, “outlook”, “priorities,” ”targets”, “intend”, “evaluate.” “seek” and similar expressions is intended to identify forward looking statements. While these statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, actual results may differ materially due to numerous important factors that are described in GM’s most recent report on SEC Form 10-K which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K. Such factors include, among others, the following: the ability of GM to complete a transaction with a strategic investor regarding a controlling interest in GMAC while maintaining a significant stake in GMAC, securing separate credit ratings and low cost funding to sustain growth for GMAC and ResCap and maintaining the mutually beneficial relationship between GMAC and GM; changes in relations with unions and employees/retirees and the legal interpretations of the agreements with those unions with regard to employees/retirees; changes in economic conditions, currency exchange rates or political stability; shortages of and price increases for fuel, labor strikes or work stoppages; health care costs; market acceptance of the corporation's new products; pace of product introductions; significant changes in the competitive environment; changes in laws, regulations and tax rates; and, the ability of the corporation to achieve reductions in cost and employment levels to realize production efficiencies and implement capital expenditures at levels and times planned by management.

GM is recording the remarks and visuals presented today which are copyrighted by GM and may not be reproduced, transcribed, or distributed in any way without the express written consent of General Motors. Therefore, this conference may not be recorded by attendees. We consider your participation to constitute your consent to being recorded today.

Additionally, in accordance with Regulation G, supplemental financial disclosure is included which provides a quantitative reconciliation of non-GAAP financial disclosures addressed in the context of the following chart set to GM’s GAAP financial results and provides definition around non-GAAP terminology addressed.

Source: General Motors

Latest GENERAL MOTORS CORPORATE Headlines

Latest Car News

All images courtesy of and copyright their respective manufacturers, unless otherwise indicated. They may not be reproduced or retransmitted in any way without the express written permission of their respective owners. All trademarks are the property of their respective owners. Model news and specifications are presented as provided by manufacturer, and do not necessarily reflect the opinions of DIGIADS. No warranty is made by DIGIADS with respect to the accuracy or timeliness of the information contained herein.
Copyright © 2000-2025 DIGIADS Australia All Rights Reserved. Contact Us
Designated trademarks and brands are the property of their respective owners. Use of this Web site constitutes acceptance of the DIGIADS Privacy Policy and User Agreement. 		Loading...