General Motors Posts Low Forcast Earnings in the Third Quarter In Spite of Revenue Increases

DETROIT, October 14, 2004; Thge AP reported that General Motors Corp. reported third-quarter earnings Thursday that were at the low end of the company's July guidance.

Quarterly earnings rose to $440 million, or 78 cents per share, from $425 million, or 79 cents per share, a year ago. Revenue rose 3 percent to $44.89 billion from 43.52 billion last year.

Analysts were looking for the company to post earnings of 96 cents per share on revenue of $36.06 billion.

The company said profits at General Motors Acceptance Corp., or GMAC, continued to be very strong compared with the prior year, but automotive results were weaker due to increased losses in Europe, lower production volumes in North America and slower economic growth in China. GMAC earned $656 million in the third quarter of 2004, up from $630 million in the year-ago quarter.

"Competition in the automotive business around the globe remains intense, and we are seeing negative pricing in most major markets," said GM chairman and chief executive Rick Wagoner. "These financial results highlight that we've got to move faster in addressing some tough cost challenges like health care in the United States and our overcapacity and high cost footprint in Europe, where we announced major restructuring actions earlier today."

The company's European arm earlier reported plans to slash 12,000 jobs over the next two years, mostly at engineering and manufacturing divisions in Germany.

GM's global-automotive business reported a loss of $130 million in the latest quarter, compared with net income of $34 million in the prior-year period. Positive results at GM's Latin America/Africa/Mid-East were more than offset by losses at GM North America and GM Europe, and lower profits at GM Asia Pacific.

GM continues to expect total U.S. industry sales of about 17.2 million vehicles in calendar year 2004. As a result of increased losses in Europe and slower growth in Asia Pacific, the company revised its 2004-calendar-year earnings guidance to between $6 and $6.50 per share, excluding one-time items. This is in line with GM's original target at the start of the year and down from mid-year guidance of about $7 per share.