Nation's No. 1 automaker posts much stronger than expected earnings as revenue tops forecasts on improved North American sales.
October 25 2006: 8:27 AM EDT

NEW YORK (CNNMoney.com) -- General Motors posted third quarter operating profit that nearly doubled Wall Street's earnings expectations as its turnaround efforts continued to show results.

The nation's No. 1 automaker earned $529 million, or 93 cents a share excluding special items, compared with a loss of $1.1 billion, or $1.92 a share on that basis a year earlier.

GM kicked by biggest investor
Kerkorian adviser York quits board, citing 'grave reservations' about company's ability to compete; stock takes a beating. (more)
GM pulls plug on Nissan-Renault talks
Negotiations for global auto alliance collapse after Renault-Nissan rejects GM's demand to be compensated for tie-up. (more)
GM's brightest star
South Korea's Daewoo brings GM into the subcompact market, cementing a very successful partnership. (more)

Analysts surveyed by Briefing.com had forecast earnings of only 49 cents a share in the period.

Shares of GM (Charts), a Dow component, gained 1.4 percent in pre-market trading following the report, helping to to lift stock futures towards a higher open for U.S. markets.

While special charges still left GM with a narrow net loss in the period, the result was the second straight quarter the company posted an operating profit after posting five straight quarters of large losses.

While not all of its problems are behind it, its improved results in what is a traditionally difficult period for auto profits showed it is achieving some of the cost-cutting goals it set out a year ago.

The company also cut its announced exposure to costs associated with the bankruptcy of auto parts maker Delphi (Charts). GM (Charts) said it now could be on the hook for between between $6.0 and $7.5 billion in pre-tax obligations to its former parts unit, as compared to a previously disclosed range of $5.5 to $12 billion.

GM (Charts) still reported a narrow loss on its core automotive operations, but shaved $1.3 billion of losses from its North American operations, as it instituted labor and health care cost savings negotiated over the past 12 months with the United Auto Workers union. The company said it is on track to reach $6 billion in annual cost savings from those moves this year.

Revenue from auto sales also topped forecasts but only slightly, rising to $39.5 billion from $38.4 billion a year earlier. Analysts had forecast sales of $38.8 billion.

While the number of vehicles sold in North America fell 8 percent, revenue from that core market edged up just less than 1 percent as it posted stronger sales of its newly designed SUV's compared to a year earlier despite higher gas prices at the beginning of the most recent quarter.

The auto revenue helped lift overall revenue to $48.8 billion from $47.2 billion a year earlier. The charges associated with staff buyouts and early retirements, other restructuring moves and the sale of its GMAC finance unit left the company with a net loss in the period of $115 million, or 20 cents a share. But that's an improvement from the loss of $1.7 billion, or $2.94 a share, in the year-earlier period.

GM still did not give guidance as to when it will return to profitability in its core auto operations, despite the good news on costs and sales.
Ford's loss widens to $5.8 billion

GM's report comes two days after competitor Ford Motor Co. (Charts) reported a bigger than expected loss. Honda Motor (Charts) also reported disappointing results Wednesday although it raised its full year guidance on strong U.S. sales. DaimlerChrysler (Charts) is also due to report results Wednesday morning, and losses at its Chrysler Group unit is expected to hit results there.