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Cost Cuts Start To Pay Off For GM

World's largest automaker posts much smaller-than-expected loss in third quarter.

DETROIT (AP) - General Motors posted a $115 million loss for the third quarter on Wednesday as it began to reap the benefits of its turnaround plan.

The world's biggest automaker said that excluding special charges, it would have earned $529 million in the period.

GM's loss amounted to 20 cents per share for the July-September period and was far better than its loss of $1.7 billion, or $2.94 per share, a year earlier.

The company said that excluding charges associated with the reorganization at Delphi Corp., its former parts division, and its lowered assessment of the value of its finance arm, it earned 93 cents per share in the latest quarter.

That beat Wall Street expectations. Analysts polled by Thomson Financial expected the company to earn 49 cents per share excluding special charges.

Revenue for the period totaled $48.8 billion, up from $47.1 billion during the same period last year.


GM attributed much of the improvement to its global automotive operations, where the company still lost $116 million, but that was an improvement of $1.5 billion over last year's third quarter.

In North America, GM lost $374 million, but that was an improvement of $1.3 billion over last year, the company said.

Chief Financial Officer Fritz Henderson said the company is benefiting from significant cost reductions from its turnaround plan. The company is on target to reach $9 billion in structural cost reductions this year, Henderson said.

Still, GM is losing money and is not satisfied with its cuts or improved revenue, Henderson said.

''We're reducing the level of cash burn year to date ... but still we're not generating cash,'' he said.

The company looks for better sales in the fourth quarter as its redesigned pickup trucks enter the market, but Henderson would not say when GM expects to turn a profit.

Globally, GM's market share in the quarter was 13.9 percent, down from 14.4 percent during the same quarter last year. GM attributed the drop to its strategy of reducing low-profit sales to rental car companies in North America and Europe.

The company benefited in the third quarter from a small increase in demand for trucks, Henderson said, although he said the consumer is still focused on fuel economy.

''That doesn't mean we are going to take our foot off the gas in terms of passenger cars,'' he said.