GM Profitable in All Regional Units: CEO
General Motors Co. is now profitable in all of its regional units, Chief Executive Officer Dan Akerson said. That’s a sign of a turnaround for a company whose European Opel unit is still in fix-it mode.
Akerson, speaking at Bloomberg’s Dealmakers Summit in New York today, said GM’s global presence was one of the selling points during the company’s initial public offering last year. In July, Akerson squelched rumors that GM planned to sell Opel. GM was correct to have reversed an agreement to sell its European Opel unit in 2009, he said.
“It was a bad deal,” Akerson said. “We were giving Europe away.”
GM, the largest U.S. automaker, predicts that its European business will be profitable this year, excluding some costs. Losses at the unit were a question mark for investors when the company went public in November 2010, according to Bloomberg.
GM has been cutting capacity in Europe and has hired Detroit consulting firm Alix Partners to help the company find efficiencies in engineering and revenue opportunities in its sales and marketing operations.
Opel earned $102 million in the second quarter before taxes and interest. The German business unit lost $390 million in the first quarter because of $395 million in goodwill impairment costs.
GM, based in Detroit, has lost $14.5 billion in Europe since 1999. The automaker in 2009 agreed to sell 55 percent of Ruesselsheim, Germany-based Adam Opel GmbH to Magna International Inc. and partner OAO Sberbank, before reversing course in November 2009.
Akerson appeared at the gathering with JPMorgan Chase & Co. Vice Chairman James B. “Jimmy” Lee. JPMorgan, Morgan Stanley, Bank of America Corp. and Citigroup Inc. led the GM IPO.
“Investors liked the story,” Lee said of the GM offering, which was originally priced at $26 to $29 a share before being sold at $33. “Another piece of the puzzle was new management. Investors said, ‘This was a new bunch of guys running this company.’”
GM’s goal for Europe is to be “profitable by just better than break-even before restructuring charges,” Nick Reilly, president of GM Europe, told reporters Sept. 13 at the Frankfurt auto show.
“In 2012, we won’t have those restructuring charges,” Reilly said at the time. “They’re mostly done. We’ll get the full 12-month benefit of the restructuring that we’ve done.”
GM rose 11 cents to $21.19 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have slid 36 percent from their IPO price.
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