NEW YORK: General Motors reported a 53-percent drop in quarterly earnings because of higher taxes and equity buybacks even as revenues rose nearly 4 percent.
Earnings for the quarter ended September 30 came in at $698 million on revenues of $39 billion, compared with $1.5 billion in profits on revenues of $37.6 billion a year ago.
GM said it achieved operating-performance improvements during the quarter but results were hit by $1 billion on preferred stock buybacks and dividends and an $842-million income tax expense, up from $357 million in the 2012 quarter. The combination of buybacks and higher taxes trimmed 51 cents per share from earnings, to 96 cents.
Excluding those two items, GM came in at 96 cents per share, above the 93 cents forecast by analysts. Revenues came in slightly below the $39.49-billion forecast.
Total vehicle sales rose to 2.4 million, compared with 2.3 million during the same period last year.
“We made gains in the third quarter as we improved our North American margins and increased our global share on the strength of our Chevrolet brand,” said GM chief executive Dan Akerson. “Our efforts to build great cars and trucks and deliver solid financial results were recognized this quarter by Moody’s investment grade rating.”
GM’s operating earnings rose 28 percent in North America to $2.2 billion. Results were also better in South America and Europe, where the operating loss dipped to $214 million from $487 million.
But GM’s international division—which covers Asia, Australia, the Middle East and Africa—achieved $299 million in operating earnings, down from $761 million in the year-ago period.
Akerson attributed the strong results in North America to the aggressive and successful launch of more than a dozen new vehicles which led to an improvement in average transaction prices. That helped GM boost its profit margin for the region to 9.3 percent from 7.7 percent in the third quarter of 2012.
“GM Europe has managed to stabilize key metrics like volume and pricing in an extremely challenging market,” Akerson said. “In fact, they increased their revenue year over year for the first time in two years.”
While Europe’s results have improved as a result of cost-cutting, GM cautioned that it expects to incur “significant restructuring costs” linked to the closure of a German plant which could show up on its balance sheet as early as the fourth quarter of this year. GM also cautioned that it expected industry and competitive pressures to continue in its international region, where it took a $50-million restructuring charge in the third quarter.
The region’s results have been buoyed by a strong performance in China and GM’s market share in Asia Pacific expanded slightly to 9.6 percent from 9.4 percent in the third quarter of 2012.