Justice Sirikah

Leaner General Motors Company Pledges an Early Payback of Taxpayer Money Despite Q3 Loss

by Justice Sirikah November 17, 2009
GM_logo.jpg  In its first financial report at the rear of bankruptcy protection released on Monday, General Motors Company said it lost money during the third quarter, but it was not an outright sterile performance for the automaker as it found a reason to pledge a payback of the U.S and Canadian governments’ loans way before the scheduled time. The company was taking solace from the smaller-than-expected loss and cash flow in the black at $3.3 billion for the period spanning from July 10 to September 30.

  GM revealed that it lost $1.2 billion from a net loss of $2.5 billion in the third quarter of last year.  Quarterly revenues arrived at $28 billion and liquidity balance of $42.6 billion, up from $14 billion recorded for the same quarter in 2008. However, excluding interests, taxes, depreciation, amortization and special items, the carmaker posted a profit of $1.5 billion.

  For the just-ended quarter the company owes its improved footing to the “cash-for-clunkers programme” which drove its competitive strength up 0.3 percent to 11.9 percent in the global market. Also taking hold over the three months were the cost cut savings attained through job cuts, plant shut downs and the riddance of loss-making brands to shift focus to major trademarks such as the Chevy, Cadillac, Buick and GMC. Better yet, GM even repealed its previous plans to sell its European operations of Opel and Vauxhall, further ascertaining that things were shaping up for the automaker.

  Although marred by a loss, it is on account of the reflections of stability in the term that GM has resolved to begin repaying $1.2 billion out of $1.6 billion tapped from the U.S government which owns 61 percent of the company and the Canadian government controlling 11.7 percent stake. Announcing the decision during a conference call, the firm’s CEO, Fritz Henderson had this to say: “We think it’s important to show our commitment to the taxpayers that – yes, in fact – we will begin paying back this investment”.

  On the other hand, GM’s results sparked intense discontent with some rival political groups who maintained that the loss was evidence that the Obama administration had, in the first place, made a grave bad mistake when it forwarded $50 billion of taxpayer money to the company’s downsizing cause. Even the investigative unit of the congress, Government Accountability Office (GAO) had earlier on warned that there were remote chances of GM ever repaying the bailout funds.

  At the moment GM shares are not publicly traded. However, the company is planning a public offering of shares for early next year.

  Reference:
http://www.gm.com/

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