Ignition-switch lawsuit costs dent GM earnings

GMT 16:18 2015 Wednesday ,21 October

Arab Today, arab today Ignition-switch lawsuit costs dent GM earnings

GM's results were weighed down by a $900m penalty
New York - AFP

General Motors reported slightly lower third-quarter profits Wednesday as the costs of ignition-switch litigation settlements offset strong profits in North America.

The biggest US automaker reported net income of $1.4 billion, 7.6 percent below the year-ago level. Revenues fell 1.0 percent to $38.8 billion.

But results were lifted by a 34 percent rise in pre-tax North American earnings to $3.3 billion. US auto sales in September soared to their fastest pace in more than a decade.

GM sold 794,000 cars in the United States during the quarter, up 9.2 percent from the same period of 2014.

GM's performance in other regions was far more modest. The auto giant reported slightly higher pre-tax profits in its international operations business, which includes China.

GM's car sales in China were 814,000, down 4.2 percent from the year-ago period. On the positive side, GM's profit margin in its China ventures rose to 9.8 percent from 9.6 percent.
GM's European business reported a loss of $231 million, smaller than the $387 million loss in the year-ago period. The loss in South America was $217 million, compared with a $32 million loss in the 2014 quarter.

"These results reflect our work to capitalize on our strengths in the US and China, while taking decisive, proactive steps to mitigate challenges elsewhere," said GM chief executive Mary Barra.

Results were weighed down by GM's $900 million penalty to settle a criminal US probe into its failure to recall cars with faulty ignitions linked to more than 100 fatalities. GM also spent $600 million in civil settlements.

Results translated into $1.50 per share, excluding the charges, much above the $1.19 per share forecast by analysts.

GM shares rose 4.4 percent in pre-market trade to $34.96.

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