DETROIT – General Motors Corp. (GM) Monday posted a quarterly loss of $1.6 billion, much worse than Wall Street had expected, and announced a deal with the United Auto Workers union to cut its health-care costs.
GM also said it plans to eliminate at least 25,000 manufacturing jobs.
The world's largest automaker, which lost more than $1.4 billion in the first half of the year amid deepening financial woes, posted a loss of $1.6 billion, or $2.89 a share, for the third quarter. The company had a profit of $315 million in the year-earlier quarter.
GM (search) has seen high gasoline prices slam sales of big sport utility vehicles, while increased costs for everything from raw materials to health care have also eroded profits.
Excluding special items — including a charge of $805 million for asset impairments primarily in North America and Europe and restructuring charges (search) at GM Europe of $56 million — GM's third-quarter loss totaled $1.92 per share. On that basis, analysts' average forecast was a loss of 81 cents, according to Reuters Estimates.
Quarterly revenue rose more than 5 percent to $47.2 billion.
Months of talks with the UAW over GM's demand for cuts in health care and other benefits — costs identified by Chief Executive Rick Wagoner as the company's single biggest challenge — have finally produced positive results.
The tentative agreement is projected to reduce GM's retiree health-care liabilities by about $15 billion and cut its annual employee health-care expense by about $3 billion before taxes. Cash savings are estimated to be about $1 billion a year, GM said.
News of the agreement with the union sent GM shares up sharply in pre-market trading. The shares are down about 30 percent so far this year, compared with a 2 percent drop in the S&P 500 index and a 4.6 percent decline in the blue-chip Dow Jones Industrial average.