It’s beginning to look as if GM will make it.
Last year the company made a loss of $10.6bn. Its massive cash and asset pile is diminishing; it’s now down to $21.6bn, but there are signs things are improving.
Yesterday the company revealed its sixth straight quarterly net loss. But this time, after one off gains, the loss came in at a mere $323 million, from $1.25 billion the quarter before. And that includes $1bn health care provision; remove that from the equation and the company was profitable.
In Europe something very strange happened. It made a profit and turned in net income of $48mn from a net loss of $514mn a year earlier.
And its new SUV vehicle is proving something of a hit, boosting the bottom line.
But, while it looks increasingly likely that chapter 11 will be avoided, it still has big hurdles to climb.
The company is due to fork out $1bn in 2006, 2007and 2011 in health care provision for retired workers.
Then there’s problems at Delphi. The auto parts maker used to be owned by GM but today it’s under chapter 11 and a key supplier to the auto giant.
If its potential strike amongst workers is not avoided, supply to GM will be disrupted, hitting the bottom line very hard indeed.
And even if the dispute can be avoided, the cost to GM is likely to be in $billions as it attempts to settle aggrieved workers pension fears
But perhaps the biggest indicator of the weakness at GM lies in its recent success. At a time when petrol prices are going through the roof, at a time when Toyota is putting big emphasis on hybrid cars, GM looks to gas guzzling SUVs as its saviour.
It’s as if that while it attempts to live off the past, spending its cash pile acquired in better days, culturally it’s stuck in the past too.
sources
GM’s Numbers Signal a Turn Business Week
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