General Motors Good Today, Not Tomorrow

General Motors Co. (NYSE: GM) reported third-quarter 2012 results before markets opened this morning. The automaker posted diluted earnings per share (EPS) of $0.89 on revenues of $37.6 billion. In the same period a year ago, the company reported EPS of $1.03 on revenues of $36.7 billion. Third-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.60 and $35.7 billion in revenues.

The company’s CEO said:

GM had a solid quarter because customers around the world love our new vehicles and we’re also seeing green shoots take hold on tough issues like complexity reduction, pensions and Europe.

The CFO added:

While we still have a lot of work to do, especially in Europe, it is encouraging to see our results begin to reflect the discipline we are bringing to bear on the overall business.

In its outlook for the fourth quarter, GM said that results will be “similar to or slightly better than” the fourth quarter of 2011. The company expects its European division to post a calendar year 2012 earnings loss of $1.5 to $1.8 billion before taxes, depending on “the level of restructuring activity” in the quarter. The company expects 2013 European earnings before taxes to be slightly better in 2013 and to reach a breakeven point “by mid-decade.”

The company also will reduce its pension benefits exposure by about 30% (about $29 billion) through annuitizations and lump sum cash payments of $2.6 billion in the fourth quarter. GM expects a pretax charge of about $2.9 billion in the fourth quarter as a special charge. That is about double this quarter’s income, so on a GAAP basis, GM is essentially projecting a loss for the third quarter.

GM’s shares are trading up 3.3% in premarket activity this morning, at $24.04. The company’s shares closed at $23.28 on Friday, in a 52-week range of $18.72 to $27.68. The consensus target price for the shares was around $31.35 before today’s report.

Paul Ausick