DETROIT — In a positive sign that General Motors Co.’s
restructuring is off to a good start, the company Monday said it would begin
repaying U.S. government loans later this year, ahead of what is required, and
that it generated $3.3 billion in cash during the third quarter after emerging
from bankruptcy.
Nevertheless, GM still lost money.
The Detroit automaker posted a $1.2 billion loss between
emerging from bankruptcy on July 10 and Sept. 30.
“Some signs of progress, some signs of stability,”
GM CEO Fritz Henderson said of the results. But, he added, the company is not
satisfied with its performance, noting the losses.
“It’s a loss, and we cannot be satisfied with it,”
said Henderson, who maintained the results “provide evidence of the solid
foundation we’re building for the new GM.”
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.
Henderson announced plans to repay the government’s $6.7
billion loans within about two years but said that if things are going well the
money could get paid back next summer.
“We feel confident that we can begin repayment of this
loan,” Henderson said. “We think it’s important to show our
commitment to the taxpayers that — yes, in fact — we will begin paying back
this investment.”
GM’s results drew criticism from Republicans.
Republican National Committee Chairman Michael Steele issued
a statement that said: “Today’s release of General Motors’ financial
results is further proof that President Obama’s economic experiments are wrong
for America. Sadly, GM has not only failed to turn a profit since the president
poured $50 billion of the taxpayers’ dollars into GM’s bankruptcy
restructuring, but it has actually lost $1.2 billion. As the ‘Cash for
Clunkers’ program clearly demonstrated, government interference in private
industry doesn’t help the companies involved and ends up greatly costing the
American taxpayer.”
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.
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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 Monday 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.
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.
Via McClatchy-Tribune News Service.
