GM's $2.19 billion earned in North America before interest and taxes was up 3.3%. Results reflected a shift to more sales of cars, such as the Chevrolet Cruze, which are less profitable than trucks. That reduced earnings in the region by $400 million, less than the $500 million predicted by analysts such as RBC Capital's Seth Weber, according to Bloomberg.
International operations, which includes China, earned $365 million before interest and taxes while the South American business lost $44 million, GM said in its statement. It is introducing nine new models in South America during the next year to regain profitability in the region, which made $163 million in the same period last year. The company cut 4% of employees in South America, and, CFO Ammann said, will show lower costs going forward.
'We Need to Do Better'
Said Akerson: "We need to do a better job in Europe and South America. The results there are not sustainable and not acceptable. We will continue to work on reducing the break-even levels in those regions."
GM's U.S. auto sales rose 15 percent through October this year, outpacing the industry's 10 percent gain, according to Woodcliff Lake, New Jersey-based Autodata. The automaker's market share improved to 19.8 percent from 19 percent a year earlier.
GM plunged 32 percent this year through yesterday. The shortfall of the company's pensions has become a "primary area of focus for the investment community," Peter Nesvold, a New York-based analyst for Jefferies & Co., said yesterday in a phone interview.
Global pension plans for GM employees were underfunded by $22.2 billion at the end of 2010, including a $12.4 billion shortfall in the U.S., according the company's annual 10-K regulatory filing. While GM doesn't provide updated measures until year-end, Nesvold said he expected the company will provide some guidance on funding and investment returns.
U.S. pensions were underfunded by $8.7 billion through Sept. 30, reflecting for the first time a $2 billion stock contribution made in January, Bloomberg quoted GM spokesman Jim Cain as saying. That was based on GM's valuation as of Dec. 30.
Ammann said GM wouldn't give more details on the pension status until year-end. But GM's worldwide pensions may be underfunded by about $27 billion at year-end, one analyst has written in a Nov. 7 research note.
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