General Motors Corp.'s performance in the sluggish and competitive European market overshadowed respectable showings elsewhere and record earnings per share during the third quarter.

The automaker posted a 5.5% decline in July-September consolidated net income to $829 million from $877 million year-ago. Revenues dipped slightly to $42.60 billion from $42.79 billion.

GM Third Quarter Financial Results
2000 1999 % Chg.
Sales $42,606 $42,794 -0.4
Net Income $829 $877 -5.5
E/S $1.57 $1.35 16.3
Unit Sales* 2,129 2,219 -4.1
Note: Dollar sales and net income stated in millions; unit sales in thousands.
E/S is earnings per share.
*Unit sales are worldwide wholesale deliveries and are stated in thousands.

GM Europe was the difference. It reported a loss of $181 million vs. income of $32 million. “A continued focus on cost reduction could only partially overcome the startup, which by the way is on target, of (Opel's) high-volume Corsa. The impact of volume declines, the unfavorable product and country mix and intense pricing pressures” also contributed to GM's performance there, says GM Europe President Michael Burns.

GM has been hit hard by slowdowns in Germany and the U.K., which account for 40% of its volume in Europe. “The German market year-to-date is off 350,000 units. We're off about 95,000 units,” reveals General Motors Acceptance Corp. head John Finnegan, serving as temporary chief financial officer.

Income at GM North America improved 8.5% from like-1999's $671 million to $728 million on revenue of $26.2 billion, yielding a profit margin of 2.8%. “Cost reductions in the quarter were able to offset decreased volume, an unfavorable product mix and an increase in incentives,” says Mr. Finnegan.

GM's Latin America/Africa/Mid-East operations recorded income of $31 million, compared to a loss of $36 million year-ago. Credited were increased vehicle prices and volumes.

In Asia/Pacific, GM narrowed its losses to $10 million from $54 million, as sales increased by 13,000 units. Zafira production ramp-up in Thailand put a lid on gains there, Mr. Finnegan says.

Earnings per share, however, were a bright spot for GM hitting $1.57 vs. $1.35 year-ago. The automaker warned of “significant” fourth quarter losses in Asia/Pacific (due to startup costs) and Europe (several factors including a weak euro and increasing fuel costs). Losses at Hughes Electronics will continue in October-December because of subscription and related acquisition costs. GM says it is considering “strategic transactions” that could separate the Hughes unit from the company.

The automaker is sitting on $13 billion in cash.