GM posts $1.2-billion loss, says ‘solid foundation’ formed

November 16, 2009

GM posts $1.2-billion loss, says ‘solid foundation’ formed

By TIM HIGGINS
FREE PRESS BUSINESS WRITER

In a positive sign that General Motors Co.’s restructuring is off to a good start, the company today said it would begin repaying U.S. governments loans later this year, ahead of what is required, and that it lost $1.2 billion in the third quarter after emerging from bankruptcy.

In its first financial update since emerging from bankruptcy as a new company largely owned by the U.S. government, GM also said its cash flow was a positive $3.3 billion for the July 10-Sept. 30 period.
 

The company earned $1.5 billion before interest, taxes, depreciation, amortization and special items.
 

“We have significantly more work to do, but today’s results provide evidence of the solid foundation we’re building for the new GM. With a healthier balance sheet and a competitive cost structure, our focus is on driving top line performance. We’ll achieve that by winning customers over, one at a time, with vehicles that deliver performance and value,” GM President and CEO Fritz Henderson said in a statement.
 

At 8 a.m., Henderson is scheduled to hold a news conference to discuss the third quarter results.
 

Despite the continued losses, today provides a moment of hope for GM and Detroit.
 

A year ago, GM announced a third quarter net loss of $2.5 billion that precipitated the automaker’s need for a government bailout.
 

GM ended 2008 with losses totaling $30.9 billion, its second biggest annual loss behind 2007, when it lost $38.7 billion.
 

Eventually, the U.S. Treasury would spend about $50 billion to keep GM alive and restructure the company through a government-backed bankruptcy.
 

GM’s cash situation during the July 10 to Sept. 30 was better than during the third quarter of 2008 when GM plowed through $6.9 billion in cash.
 

The results given today are unaudited managerial results and are not directly comparable to previous year’s results, company officials have cautioned. GM is no longer a publicly traded company yet is still making public its finances.
 

During the third quarter of this year, GM generated $28 billion in revenues up $4.9 billion to the revenues recognized by old GM in the second quarter of this year, the company said.

Overall, GM posted a loss of $261 million before interest, taxes and special items during the third quarter. While GM’s international operations posted a profit of $238 million, that was offset by a loss of $651 million in North America.
 

The company’s cash balance is $42.6 billion.
 

GM said it expects to have a negative cash flow during the final three months of this year for a number of reasons, including continued restructuring costs and loan payments.
 

Because of this, GM expects its cash balance to be materially lower than $42.6 billion.

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