AP reports that GM is expected to post a profit rise when it reports third-quarter earnings Thursday. However, the report added that its European business continues to falter and another severe overseas overhaul is likely to be announced too.
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GM is expected to announce a massive job reduction in Europe, where GM has failed to record a profit since 1999.
“I think they’ve come to the conclusion they have to do something fairly drastic because they’ve got too much capacity in a tough market,” said Burnham Securities analyst David Healy, quoted in the AP article. He expects GM’s European division to lose between $250 million and $300 million in 2004.
Earlier this week, the Financial Times said GM will cut almost 12,000 jobs in Europe, or one of every five of GM’s workers there, to reduce costs by $500 million a year.
In a report this week, Prudential Equity Group analyst Michael Bruynesteyn said he expects GM to earn $1.10 a share in the third quarter, up from 79 cents a share a year ago, despite a 4 percent decrease in North American vehicle production. Healy is forecasting earnings of $1 a share, 4 cents more than the current Wall Street consensus.
GM’s improvement, Bruynesteyn said, should come primarily from cost cutting in North America and improved business in the Latin America and Asia-Pacific regions.
