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GM hopeful of 2010 profit despite $US4.3B loss after bankruptcy

Despite recording a $US4.3 billion loss after bankruptcy in July last year, General Motors is hopeful of paying off its government loans by June and possibly returning to profitability this year.
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GM CEO Ed Whitaker has made repaying the company’s $US6.7 billion government loan a priority. Although it has until 2015 to pay back the money, GM has already paid back $US2.4 billion and has internally set June as the latest acceptable date to settle the outstanding amount.

GM owes the government a further $US45.3 billion which GM CFO Chris Liddell says will be repaid when GM makes a public stock offering “when the markets and the company are ready”.

There are some positive signs that GM is heading in the right direction. At the beginning of 2009 GM had $US104 billion in debt and $US14 billion in cash. This year debt has decreased by $44 billion while cash is up by $US22 billion.

Between July 10, when it came out of bankruptcy protection, and December 31 last year, GM collected $US57.5 billion in revenue. GM puts much of the $US4.3 billion loss down to one-off payments, such as $US2.6 billion to the United Auto Workers union for retiree health care.

Mr Liddell said based on strengthening production and sales in the first quarter there was a good possibility GM would make a profit in 2010 but stopped short of predicting a January-March profit, admitting he was wary of “overpromising and underdelivering”.

One thing he was steadfast on was that GM had put a disastrous 2009 behind it.

“General Motors should never again be in the financial position it found itself in last year,” he said.

GM finished 2009 with around 27,000 fewer employees than it started the year with. Since July it has completely reshuffled its management board and has relieved itself of Hummer, Pontiac, Saturn and Saab.

GM’s global production rose by 300,000 vehicles in the fourth quarter of 2009 and the company experienced a gain in US market share over the first three months of 2010.

(with AP)