Despite a net loss of $US115m, General Motors has reported “significantly improved preliminary financial results” for the third quarter of 2006.

The automaker’s claim is valid – it actually posted a profit on an adjusted basis, excluding special items, and generated its third consecutive quarter of record revenue.

Last year’s Q3 loss was $1.7bn, or $2.94 per share.

The net loss for this year’s third quarter included $644m, or $1.13 per share, in charges for special items, including goodwill impairment at GMAC and an increase to the charge associated with Delphi’s reorganisation.

GM reported 2006 third-quarter adjusted net income, excluding special items, of $529m, or $0.93 per share on revenue of $48.8bn. This is a $1.6bn improvement from the year-ago loss of $1.1bn and suggests chairman and CEO Rick Wagoner’s recovery programme is finally beginning to work.

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GM’s global automotive operations almost fully accounted for the improvement, while lower GMAC results were more than offset by tax-related benefits.

As a result of progress in ongoing discussions regarding the bankruptcy filing by Delphi, and updated estimates related to certain benefit guarantees, GM has significantly narrowed the range of its estimated potential exposure related to this filing. The new range is between $6.0 and $7.5bn pre-tax, as compared to a previously disclosed range of $5.5 to $12bn. GM believes the more likely amount of the liability is at the lower end of this new range.

Reflecting these updated estimates, GM has also increased the reserve for its contingent liability for Delphi by $500m in the third quarter, bringing the total charges taken to date to $6bn pre-tax. In addition to these charges, the final agreement with Delphi may result in GM agreeing to reimburse Delphi for labour expenses to be incurred upon and after Delphi ’s emergence from bankruptcy. The initial payment in 2007 is not expected to exceed approximately $400m pre-tax, and the ongoing expenses would be of limited duration and estimated to average less than $100m pre-tax annually. GM expects these payments to be far exceeded by anticipated reductions in Delphi material cost premiums.

“Our third quarter results again reflect significant progress in our fast-paced initiatives to turn around our business and create a company that is leaner, faster and positioned for long-term sustainable growth,” said Wagoner in a statement.

“Our turn-around efforts in North America and Europe are well under way, and having a large impact on the bottom line, as evidenced by the $1.6bn improvement for the quarter. This improvement in North America and Europe, combined with the strong sales growth and earnings performance we see in Asia and Latin America, confirm that our plan is on track. We have more work to do, and we remain focused on continuing progress in the quarters to come.

“In addition to the automotive turnaround, our near-term priorities include the successful resolution of the Delphi negotiations and closing the GMAC transaction,” added Wagoner. “While a number of important issues still remain to be resolved, we are encouraged by the progress we have made on Delphi, and remain optimistic that we can achieve a consensual agreement. Regarding GMAC, we have completed several key milestones in the process and continue to work toward a fourth-quarter close.”

Net income from global automotive operations improved by $1.5bn year-over-year, posting a loss of $116m on an adjusted basis, excluding special items (reported net loss of $62m). This improvement was due primarily to significant gains in North America, along with continued strong performance in other regions.

GM’s global market share in the third quarter was 13.9%, up slightly from the second quarter market share of 13.7%, but down from 14.4% in the third quarter of 2005. The change in market share was due largely to the company’s strategy of reducing sales of low-margin daily rental vehicles in North America and Europe. GM share in the US, however, set a stronger pace in the third quarter at 25.1%, its highest quarterly result in 2006.

GM North America posted an adjusted net loss of $367m in the third quarter of 2006 (reported net loss of $374m), a $1.3bn improvement year-over-year, despite a decrease in production of 96,000 units. This significant progress largely reflected improvements in structural costs, as the company executes the pension, health care and manufacturing cost reduction parts of its North American turnaround plan. The structural cost reductions, which are on track to total $6bn in 2006, far offset the impact of the lower production for the quarter.

GM Europe posted an adjusted net loss for the quarter of $16m (reported net loss of $103m) reflecting an improvement of $105m from the prior year’s loss of $121m. The results reflect continued restructuring, emphasiSing both structural cost reductions and improved quality of sales.

GM Asia Pacific posted adjusted net earnings of $83m for the third quarter (reported net earnings of $231m), down from last year’s $188m. The difference primarily reflects the loss of income from Suzuki following the reduction in GM’s equity interest in Suzuki and costs associated with launching the important new Holden Commodore and Statesman models in Australia.

Strong sales performance in the region continued as market share increased to 6.2% from 5.9%, driven primarily by growth in Korea and China.

GM Latin America, Africa and Middle East posted strong adjusted and reported net earnings of $184m for the third quarter, an improvement of $153m from a year ago and due largely to an increase in volume generated by new product launches throughout the region.

GMAC Financial Services earned adjusted net income of $346m in the third quarter of 2006, compared to record net income a year ago of $654m.

GMAC’s reported net loss for the quarter totaled $349m, which included non-cash goodwill impairment charges of $695m after-tax related to GMAC’s Commercial Finance business.

GMAC’s financing operations earned $136m for the third quarter, as compared to $139m earned in the year-ago period. These results include an expense of $135m related to GMAC’s successful third quarter offer to repurchase $1bn worth of certain zero coupon bonds, which will result in improved earnings in future quarters. Auto finance results otherwise benefited from an increase in net financing revenue as a result of strong retail financing penetration as well as lower provisions for credit losses.

GMAC paid GM a $500m dividend in the third quarter, resulting in 2006 year-to-date cash dividends of $1.9bn.