DETROIT (AP) – General Motors Corp. earned $425 million in the
third quarter, reversing an $804 million loss a year ago, but
global automotive earnings fell 91 percent because of intense
pricing pressure in North America and unfavorable exchange rates
overseas.

The world’s biggest automaker said yesterday its profit amounted
to 79 cents a share in the July-September period, easily beating
the consensus of 66 cents a share of analysts surveyed by Thomson
First Call.

The company was upbeat looking ahead, saying it expected to
exceed its original 2003 earnings target of $5 a share.

“The accelerating U.S. economy and enthusiastic response to our
new products gives us reason for optimism,” said chairman and chief
executive Rick Wagoner.

A year ago, GM posted a loss of $1.42 a share in the third
quarter, when one-time expenses totaled $1.42 billion, or $2.62 a
share.

That included a $1.37 billion expense related to GM’s investment
in Fiat Auto Holdings. GM had no special charges in the third
quarter of 2003.

Revenue rose 5.4 percent to $45.9 billion from $43.6 billion a
year ago.

The automaker also reported it contributed $5.5 billion to its
U.S. pension plans in September and another $8 billion in early
October, bringing its year-to-date contributions to $14.4
billion.

As a result, the company revised its anticipated 2003 pretax
pension expense from $2.8 billion to $2.6 billion.

GM’s pension liabilities, which totaled $19.3 billion to start
the year, have been a concern among investors and a drag on
earnings.

GM said its new, four-year labor contract with the United Auto
Workers increased its pension obligations for U.S. hourly and
salaried workers by $2 billion.

The 1999 contract added roughly $5 billion to the company’s
pension liability.

“We’re making good progress in getting our pensions funded,
probably a lot earlier than many of you thought,” John Devine, GM’s
vice chairman and chief financial officer, said in a conference
call with analysts and automotive journalists.

Excluding results from GM’s Hughes Electronics satellite
television business, which GM is selling to Rupert Murdoch’s News
Corp., the automaker earned $448 million, or 80 cents a share, in
the quarter. That compared with net income of $696 million, or
$1.24 a share, a year ago. The year-ago figure also excludes
one-time charges.

Earnings from GM’s global automotive operations dropped
dramatically to $34 million from $368 million a year ago.

In North America, GM earned $128 million, down from $533 million
in the year-ago period. The company said improvements in sales mix
and other factors were offset by costly consumer incentives, a 5
percent decline in production and increased pension and health care
expenses.

On a positive note, Devine said revenue per vehicle rose to
$18,984 in the third quarter, up from $18,782 a year ago and
$18,565 in the second quarter.

Devine said the higher revenue reflects an increase in vehicle
prices and a slight reduction in incentives from the second to
third quarter.

“It’s giving us some expectation that retail incentives are at
least flattening out,” he said.

GM said its U.S. market share rose to 28.7 percent in the
quarter, compared with 28 percent in the same period last year and
27.9 percent in the second quarter of 2003. Still, GM’s U.S. sales
through September were down 3.1 percent from the first nine months
of last year.

GM’s North American results exceeded expectations of some
analysts, including David Healy of Burnham Securities Inc.

“Sure, there was a major profit squeeze, but they were still in
the black and their situation appears to be improving,” Healy
said.

GM Europe narrowed its loss in the quarter to $152 million from
$180 million a year ago. GM Asia-Pacific had a strong quarter,
posting a profit of $162 million, an increase of $86 million from a
year ago.

The company’s financing business continued to post strong
results, spurred by mortgage operations. GMAC earned $630 million
in the third quarter, a 30 percent increase from the third quarter
of 2002.

Hughes on Tuesday reported a loss of $23 million in the third
quarter, compared with a loss of $81 million in the year-ago
period. Excluding one-time charges, the year-ago loss was $14
million.

GM is selling its 19.8 percent stake in Hughes, the parent of
DirecTV, to News Corp. Murdoch’s company agreed in April to acquire
control of Hughes in a $6.6 billion cash and stock deal.

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