GM overcomes huge recall costs, posts healthy profit
DETROIT - General Motors' (GM) third-quarter profit fell slightly, but the company rode strong North American sales to overcome $1.5 billion in costs from its deadly ignition switch recall.
The Detroit automaker's net income slipped 1.4 percent from a year ago, but still was $1.36 billion, or 84 cents per share. That compares with $1.38 billion, or 81 cents per share a year ago.
Without the recall costs, GM would have made a $1.50 per share, soundly beating Wall Street expectations. Analysts polled by FactSet expected $1.18 per share.
The company posted a record $3.3 billion pretax profit in North America, more than offsetting a small decline in China and a loss in South America.
Revenue from July through September fell 1 percent to $38.8 billion, also beating analysts' forecasts.
The recall costs included $900 million to fend off criminal prosecution over the ignition-switch scandal and about $600 million to settle multiple wrongful death and shareholder lawsuits stemming from the problem.
The switches in older model small cars such as the Chevy Cobalt can slip out of the "run" position and cut off the engine. They have been linked to at least 169 deaths.
GM said in September that ignition-switch scandal cost it over $5.3 billion. Even with the settlements, GM cannot close the books on the scandal. It still faces more than 400 death and injury cases that have yet to be settled. Six cases are scheduled for trial, including one in January.
GM shares jumped $1.03, or 3.1 percent, to $34.51 in premarket trading Wednesday.