Although the automaker reported a $1.2 billion loss, GM said results have improved enough that it can start early repayment of loans to U.S. Treasury.

By Chris Isidore, CNNMoney.com senior writer
Last Updated: November 16, 2009: 8:05 AM ET

NEW YORK (CNNMoney.com) -- General Motors said better results will allow it to start repaying government loans sooner than expected, although the company continued to lose money in its first quarter since emerging from bankruptcy.

The automaker said Monday it anticipates paying $1 billion to the U.S. Treasury in December, along with $192 million to the Canadian and Ontario governments.

GM received $6.7 billion in loans from the U.S. Treasury as part of its bankruptcy proceedings, along with help from Canada and Ontario. But this is only a fraction of the $50 billion in help GM received from U.S. taxpayers since the end of 2008.

The U.S. government now owns a majority stake in GM, and it is not clear that taxpayers will ever recover much of that investment.

Despite a recent upturn in auto sales, GM continues to struggle. The company said it lost $1.2 billion between its emergence from bankruptcy on July 10 and the end of the third quarter on Sept. 30.

By way of comparison, two of GM's top rivals -- Ford Motor (F, Fortune 500) and Toyota Motor (TM) -- reported unexpected quarterly profits during the third quarter.

Still, GM's third-quarter loss was smaller than the $2.5 billion the company lost from continuing operations in the third quarter of 2008. But comparisons to last year are difficult since much of what was GM a year ago was shed during the bankruptcy process.

GM said revenue from auto sales plunged 25% compared to a year earlier, as sales during the first nine days of the period at the old GM along with the remaining days of the quarter at the new post-bankruptcy GM came to about $28 billion.

As sharp a decline as that was, sales were helped by the government's popular Cash for Clunkers program, which boosted demand for four weeks in late July and August. GM said revenue from auto sales in the third quarter were up $4.9 billion, or 21%, from the second quarter.

"We have significantly more work to do, but today's results provide evidence of the solid foundation we're building for the new GM. With a healthier balance sheet and a competitive cost structure, our focus is on driving top line performance," said GM president and chief executive officer Fritz Henderson in a statement.

The company said it expects industry sales to be down in the fourth quarter from third quarter levels, but that demand should improve in 2010. It did not give any guidance on when it expects to return to profitability.

Despite the quarterly loss, the company reported cash flow of $3.3 billion since emerging from bankruptcy, a stark difference from how GM burned through cash for most quarters over the past five years.

The increased cash flow left GM with $42.6 billion cash on hand at the end of the quarter, although the company said it will have to use some of that cash in the fourth quarter to repay government loans, make an additional $1 billion in restructuring payments and pay a $2.8 billion settlement related to the end of the bankruptcy at Delphi, its former parts supplier.

http://money.cnn.com/2009/11/16/news/companies/gm_results/index.htm