By Jeff Bennett
General Motors Co. is scheduled to release its third-quarter
financial results before the market opens Thursday. Here's what you
need to know:
EARNINGS FORECAST: Net income of 97 cents a share is the
consensus of analysts surveyed by Thomson Reuters, compared with 96
cents reported for third quarter of 2013. GM has said most
extraordinary recall and quality-related expenses have been
accounted for, but the company hasn't given guidance on the impact
that severe volume downturns in two emerging markets--Russia and
South America--will have on the bottom line.
REVENUE FORECAST: Revenue of $39.1 billion is forecast, compared
with $39.0 billion reported the same period a year earlier.
WHAT TO WATCH:
--NORTH AMERICA MARGINS: Strong pickup trucks sales combined
with higher transaction prices on most vehicles and lower discounts
are expected to push North America's earnings before operating
profit margins to more than 10% as the auto maker aims to close the
profit gap with rival Ford Motor Co. A major miss here could spell
trouble for the company since industry analysts say GM is now
entering an opportune time to wring more profit from the U.S.
market based on its improved portfolio and reduced competition from
Ford as its revamps its F-150 pickup truck.
--EUROPE: GM Chief Executive Mary Barra earlier in October said
the auto maker will report a profit in Europe by 2016. However, the
company has immediate challenges in Russia, where a softer economy
and political crisis have created headaches for several global auto
makers, including GM.
--GM INTERNATIONAL: Any signs of a sequential reduction of
expenses and red ink in the international operations could be a
boost for the auto maker. The company has wrestled with languishing
problems in Australia and South Korea. The company is looking to
streamline its approach to India and it has been a slow mover in
the Asean light-vehicle market. GM International doesn't include
South America, Europe, Russia or China.
--RECALLS: Any additional details on costs could provide more
insight into the final tab the company faces for ignition switch
problems and other quality and safety issues. The auto maker has
now recalled more than 30 million vehicles in 2014 and is beginning
to settle claims from those injured or killed by its faulty
ignition switch. A total of 29 death claims have been confirmed.
Potential claimants have until the end of the year to file.
--OUTLOOK: U.S. auto sales are tracking near decade-high demand
levels, Western Europe has reported 13 months of sales gains and
China remains in growth mode. GM's outlook for the fourth quarter
and 2015 will set the tone for the auto supply base, retail network
and other auto makers during the earnings season.
Write to Jeff Bennett at jeff.bennett@wsj.com
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