General Motors is poised to post another loss on Tuesday as it toils to spur sales and turn consistent profits, Dow Jones’ marketwatch.com said ahead of the automaker’s noon GMT results announcement.
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The report said GM’s shares have shed more than 15% in the past three months, though investors rode the stock more than 5% higher to close at $US27.12 on Monday.
Marketwatch.com said analysts polled by Thomson Financial are looking for GM to post a fourth-quarter loss, on average, of 54 cents a share on revenue of $44.4 billion. Separately, a Bloomberg News poll said analysts expect a loss of 64 cents a share.
GM bucked subprime mortgage losses at its GMAC financial division in Q4 ’06 to swing to a profit thanks mainly to reduced labour costs in North America, marketwatch.com noted, adding that GMAC, of which GM now owns only 49%, will again weigh on the bottom line as the lending arm, with Cerberus Capital Management owning the remaining 51%, reported a $724m net loss last week as it continued to suffer from the real estate slowdown.
The report added that Wall Street is expecting a full-year loss at GM itself of 95 cents a share on sales of $176.5bn after a difficult third quarter, when GM handed in a record loss of $68.85 a share due to a massive accounting charge.
According to marketwatch.com, Bear Stearns analyst Peter Nesvold downgraded GM to ‘under-perform’ last week, citing a consumer base that will be increasingly hesitant to shell out cash for a new car during current housing slump.
“We expect heightened incentives and continued market share losses for the foreseeable future into a fading product cadence and a declining ’08 market,” he said.
Nesvold also said he believes the company has set unrealistic targets for industry sales, North America revenue and profits from its financing division.
Bloomberg News noted about six of every 10 new GM vehicles is now sold overseas.
Rising output abroad and a cost-saving labour contract may push profit to $12.75 a share by 2010, Burnham Securities analyst David Healy told the news agency.
“The market had underestimated GM’s ability to grow,” Lehman Brothers analyst Brian Johnson in New York told Bloomberg, adding the company is poised to outpace the industry in some of the fastest-growing markets, including China and Latin America.
Chris Lacey, who runs the company’s central and eastern European and Russian operations from Budapest, Hungary, told Bloomberg that keeping pace with demand outside the United States is pushing GM toward the 10m sales mark – the automaker can produce about 439,000 vehicles in the region now and may double that by the end of 2009.
