GM profit drops 12% in 3rd quarter

General Motors on Wednesday posted a 12 percent drop in profit for the third quarter from a year ago, hit by losses in Europe, but said it expected to break even in the region by mid-decade. GM, the largest US automaker, reported third-quarter net income of $1.5 billion, well above Wall Street expectations, largely because of higher sales. Earnings of 93 cents per share, excluding one-time items, roared past analysts' consensus estimates of 60 cents. Revenue rose 2.4 percent to $37.6 billion in the July-September quarter, sharply higher than the $35.7 billion expected by analysts. For its troubled Europe operations, the company forecast a 2012 loss of between $1.5 billion to $1.8 billion, depending on the level of restructuring under way in the fourth quarter. GM Europe had an adjusted loss of some $500,000 in the third quarter, up from $300,000 a year ago. The company said it expected the full-year 2013 results to be "slightly better" than 2012, and break-even results were "targeted by mid-decade." The weak European results were partly offset by improved performances in international and South America businesses. In North America, the Detroit, Michigan-based automaker reported better-than-expected $1.8 billion earnings before interest and taxes, down from $2.2 billion a year earlier. "GM had a solid quarter because customers around the world love our new vehicles, and we're also seeing green shoots take hold on tough issues like complexity reduction, pensions and Europe," said GM chairman and chief executive Dan Akerson. Last week German competition authorities approved a proposed alliance between French carmaker PSA Peugeot Citroen and GM, which owns Germany's Opel. In an alliance unveiled in February, the two auto giants said they would develop joint platforms and technologies and pool their purchasing activities in order to cut costs. As part of the tie-up, GM agreed to transfer most of its logistics activities in Europe to Gefco, a wholly owned subsidiary of PSA Peugeot Citroen. The agreement, which comes into effect in 2013, will cover most of the logistics activities in Europe, including Russia, of Opel/Vauxhall, Chevrolet and Cadillac. It includes services such as material and component deliveries to manufacturing plants, delivery of finished vehicles to dealerships and the transport of after-sales spare parts to distribution centers. "While we still have a lot of work to do, especially in Europe, it is encouraging to see our results begin to reflect the discipline we are bringing to bear on the overall business," said GM's chief financial officer, Dan Ammann. Shares in GM jumped 4.8 percent to $24.40 in pre-market New York trade.