GM, Chrysler, Ford Profits Up in Third Quarter Precede HIGHLAND PARK
DETROIT (AP) _ General Motors Corp. said today that despite a slight drop in revenue, its third-quarter earnings more than doubled from a year earlier, in part because of a change in accounting method for equipment.
GM, the nation’s largest automaker, earned $812.3 million, or $2.28 per share of common stock, on revenue of $22.6 billion in the three months ending Sept. 30.
In the corresponding period last year, GM earned $345.1 million, or 80 cents a share, on revenue of $22.84 billion.
In the first nine months of 1987, GM earned $2.7 billion, or $7.70 a share, up 6 percent from $2.56 billion, or $7.24 per share, in the year-ago period.
Revenue totaled $75.4 billion, compared with $77.3 billion a year earlier.
GM’s financing arm, General Motors Acceptance Corp., earned $325 million in the third quarter, while GM’s Hughes Electronics Corp. earned $134 million and Electronics Data Systems Corp. earned $82.3 million in the third quarter.
GM’s earnings were helped by the profitability of GMAC, but also by an accounting change that slows depreciation and amortization of equipment and factories, reducing the associated costs, GM Chairman Roger Smith and President Robert Stempel said.
Chrysler Corp.’s profits rose in the third quarter to 7.7 percent above the corresponding period last year, but were down 11.9 percent the first nine months of 1987, the nation’s No. 3 automaker said today.
Chrysler reported third-quarter net earnings of $253 million dollars, or $1.15 per share, on revenues of $6.3 billion, up from $234.9 million in earnings, or $1.06 per share, on revenues of $5.3 billion in third-quarter 1986.
In the first nine months of 1987, Chrysler earned $951.4 million or $4.38 a share, on revenues of $18.9 billion, down from $1.08 billion in earnings, or $4.83 a share on revenues of $16.96 billion in the first nine months of 1986.
Chrysler bought American Motors Corp. in August and Electrospace Systems Inc. shortly afterward. It also bought NFC Leasing Inc., which leases and refurbishes computer equipment, during the third quarter, which ended Sept. 30.
Chrysler Chairman Lee Iacocca said he was pleased with Chrysler’s third- quarter results,″especially when you look at the economy and the marketplace we’re operating in.
″We faced an industry-wide car sales slump, a strike in Canada, heavy costs to introduce new products, and we completed three acquisitions - and we were still able to record one of the finest earnings periods in our history,″ Iacocca said.
Chrysler said the strike by members of the Canadian Auto Workers union cost Chrysler production of more than 4,000 minivans and slowed the launch of its new line of front-wheel drive luxury cars.
The company said it will lay off nearly 10 percent of its white-collar workforce this year and make additional cuts of 3 percent annually the next five years.
″What we’re doing here at Chrysler hurts. It has hurt for six months and it’s going to hurt some more,″ Iacocca said.
Iacocca said the layoffs in the 38,000-member salaried workforce would help trim costs following Chrysler’s purchase AMC, which added 5,700 white-collar workers to Chrysler’s payroll.
Iacocca also confirmed that Chrysler has scrapped plans to build a car called Allure, a two-door version of its Eagle Premier, which is being built in a new Bramalea, Ontario, assembly plant it acquired when it bought AMC.
On Monday, Ford Motor Co. reported earnings of $703.2 million in the third quarter, boosting its 1987 earnings beyond the record $3.3 billion it earned for all of 1986. But Wall Street conditions pushed down the value of Ford stock.
The No. 2 automaker’s earnings came to $2.76 a share on sales of $15.25 billion, up 1.4 percent from earnings of $693.3 million, or $2.61 a share, on sales of $14.36 billion in the third quarter of 1986, Ford said Monday.
In the first nine months of 1987, Ford earned $3.7 billion, or $14.34 a share, on sales of $52.8 billion. That was a 47.7 percent increase from the first nine months of 1986, when the No. 2 automaker earned $2.5 billion, or $9.33 a share, on sales of $46.5 billion.
It also was $408 million higher than Ford’s earnings for 1986, when it out- performed industry leader General Motors Corp. for the first time since the 1920s. GM earned $2.9 billion in 1986.
GM subsidiaries General Motors Acceptance Corp., Hughes Electronics Corp. and Electronic Data Systems Corp. also reported third-quarter earnings Monday.
Despite its earnings performance, Ford’s stock closed Monday at $68 on the New York Stock Exchange, down $6 a share, in what was a down day for all the most-traded stocks.
″The market psychology remains very negative, and in that kind of a market the earnings don’t mean very much,″ said industry analyst Michael Luckey at Shearson Lehman Bros. in New York.
″The other reason why Ford’s (stock) performance remains detached from earnings is that it’s a very easy stock to sell. There’s still a big gain from earlier in the year,″ Luckey said.
GM’s subsidiaries all reported increases in third-quarter earnings over a year ago. GMAC, GM’s lending arm, reported earnings of $325 million, up 3.6 percent from $313.7 million a year ago despite a 22.4 percent drop in retail and lease financing volume to $15.2 million from $19.6 million a year ago.
For the first nine months of 1987, GMAC earned $1.2 billion, up 37 percent from $888.9 million a year ago despite a 23.5 percent drop in retail and lease financing to $36.7 billion from $48 billion a year ago.
Hughes, a high-tech defense and electronics company, earned $134 million, or 85 cents for GM Class H share, on sales of $2.5 billion, up 6 percent from $126.4 million, or 82 cents a share, on sales of $2.55 billion in third- quarter 1986.
Hughes’ nine-month earnings rose 9.9 percent to $412.8 million, or $2.62 per GM Class H share, on sales of $7.82 billion from $375.6 million, or $2.44 per share, on sales of $7.86 billion a year ago.
EDS, earned $82.3 million, or 68 cents per GM Class E share, on sales of $1.12 billion, up 15.8 percent from $71.1 million, or 58 cents a share, on sales of $1.16 billion in third-quarter 1986.
EDS nine-month earnings were up 16.1 percent, to $218.9 million or $1.80 per GM Class E share on sales of $3.24 billion, from $189.4 million, or $1.55 a share, on sales of $3.22 billion a year ago.
Ford sold 1.2 million vehicles worldwide during the third quarter, down 7 percent from a year ago.
″Despite slightly lower volumes compared with a year ago, Ford continued to improve its underlying profitability,″ Ford Chairman Donald Petersen and President Harold Poling said in a joint statement.
″We also are pleased with the new three-year agreement reached with the (United Auto Workers union) last month. The union and the company approached negotiations with an open mind and a common goal: international competitiveness and preservation of the U.S. industrial base and the jobs it provides,″ they said.