General Motors’ cost cuts will bring profit in fourth quarter,
For the full year, 10 of the analysts expect earnings of $4.39 per share, again excluding billions of dollars in restructuring costs that probably will leave it with a net loss.
“It’s kind of a sweet spot in here where the benefits of the cost cuts outweigh still-rising health care costs, still-softening market share over the longer term,” he said.
The company won’t predict full-year figures.
One of the analysts, Kevin Tynan of Argus Research, a New York- based equity research company, said quarterly profits might continue for a while as GM benefits from huge cost cuts made during the past two years, including hourly worker buyouts and health care concessions from the United Auto Workers union.
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GM, he said, is entering a period where the cuts have taken hold and have yet to be affected by inflation or anything else that would negate their impact on the bottom line.
GM is winding its way through a massive restructuring process that includes more than 34,000 blue-collar workers taking buyouts or early retirement offers. The company said the departures have helped it cut costs by $9 billion on an annual basis, and it is saving money by developing more of its cars globally.
The world’s largest automaker, which reported losing $3 billion through the first nine months of last year and $10.6 billion in 2005, says it will report net income for the first quarter in two years when it announces its fourth-quarter and full-year 2006 results sometime this week.
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David Healy, an analyst with Burnham Securities and a GM shareholder, said GM might surpass the analysts’ estimate for the fourth quarter.
Analysts don’t expect the profit to be huge, but say it’s a sign GM’s restructuring plan, or at least its massive cost cutting, is beginning to take hold.
