GM's profits increase, but global earnings fall

DETROIT — General Motors Corp. swung to a profit of $425 million in the third quarter from a loss of $804 million a year ago, but global automotive earnings fell 91 percent because of intense pricing pressure in North America and unfavorable exchange rates overseas.

The world's biggest automaker said Wednesday its profit amounted to 79 cents a share in the July-September period, easily beating the consensus of 66 cents a share of analysts surveyed by Thomson First Call.

The company was upbeat looking ahead, saying it expected to exceed its original 2003 earnings target of $5 a share.

"The accelerating U.S. economy and enthusiastic response to our new products give us reason for optimism," said chairman and chief executive Rick Wagoner.

A year ago, GM posted a loss of $1.42 a share in the third quarter, when one-time expenses totaled $1.42 billion, or $2.62 a share. That included a $1.37 billion expense related to GM's investment in Fiat Auto Holdings. GM had no special charges in the third quarter of 2003.

Revenue rose 5.4 percent to $45.9 billion from $43.6 billion a year ago.

The automaker also reported it contributed $5.5 billion to its U.S. pension plans in September and another $8 billion in early October, bringing its year-to-date contributions to $14.4 billion.

As a result, the company revised its anticipated 2003 pretax pension expense from $2.8 billion to $2.6 billion. GM's pension liabilities, which totaled $19.3 billion to start the year, have been a concern among investors and a drag on earnings.

GM said its new, four-year labor contract with the United Auto Workers increased its pension obligations for U.S. hourly and salaried workers by $2 billion. The 1999 contract added roughly $5 billion to the company's pension liability.

"We're making good progress in getting our pensions funded, probably a lot earlier than many of you thought," John Devine, GM's vice chairman and chief financial officer, said in a conference call with analysts and automotive reporters.

But in trading on the New York Stock Exchange, GM shares fell 42 cents to close at $43.55.

Excluding results from GM's Hughes Electronics satellite television business, which GM is selling to Rupert Murdoch's News Corp., the automaker earned $448 million, or 80 cents a share, in the quarter. That compared with net income of $696 million, or $1.24 a share, a year ago. The year-ago figure also excludes one-time charges.