GM lose $4.3bn in six monthsGM lose $4.3bn in six months

GM Losses 2009

Struggling US car-making giant GM, once the biggest car company on the planet, have announced that between July and December last year, it lost a staggering $4.3 billion as it battled to escape bankruptcy protection, repay government loans whilst also trying to cope with the recession and a crash in sales.

But despite the huge losses GM's chief financial officer Chris Liddell has come out fighting, "I continue to believe that we have a chance of achieving profitability in 2010," he told reporters.

However it's almost impossible to compare these results to those of previous years because GM has undergone a major restructuring, and the US government currently owns a 61 percent stake in the company after receiving $57.5 billion in federal cash. Furthermore, these figures only measure the period from July 10, when GM emerged from bankruptcy protection after shedding billions in debt, through to December 31. GM said it earned $109 million in the period from Jan. 1 to July 9, under old accounting.

The announced figure of $4.3 billion was worked out using 'fresh-start accounting' meaning GM could completely revalue its assets after bankruptcy protection, making it the largest company ever to go through the 'fresh-start' process.

Performing a minor miracle

In terms of repaying its government debt, GM will do so in full when it makes a public stock offer but the company insists it is capable of repaying $6.7 billion in cash this year. The AP reports that GM made a $1 billion payment to the US government in December and another $1 billion payment in March. GM's new Chief Financial Officer Chris Lidell said last month that the company still hopes to repay the entire $6.7 billion before June.

Under increasing pressure from the global economic downturn, new CEO Ed Whitacre started shedding some of GM's major brands - Pontiac, Saturn, Saab and Hummer - initiated some fierce restructuring and also cut thousands of jobs.

GM currently remains the biggest car company by sales in the United States, and is beginning to see shoots of recovery in its share of the US car market. But the road to recovery will be long, and to emerge in profit by the end of 2010 GM will have performed a minor miracle.

Related Articles:

Volvo sold to Chinese group | Building a successful brand | Ford profits from Toyota's woes

Daniel Jones

Daniel is a Politics and Philosophy graduate from Cardiff University where he also worked as a section editor on the award winning student newspaper. After university he joined an IT support company where he was a B2B online writer. He loves anything to do with sport and joined GDS in July 2009.

Like this article? Get the RSS feed: