General Motors looks to have another turnaround on its hands: CEO Dan Akerson announced this week that the company’s European arm will be profitable by the end of the year, after over a decade of losses.
While speaking at Bloomberg’s Dealer Summit in New York, Akerson pronounced that the long-struggling Opel organization had earned $102 million in the second quarter before factoring in taxes and interest. Impressive, considering the company had lost $390 million in the first quarter of 2011. Since 1999, GM’s European arm as a whole has lost $14.5 billion.
The profit announcement comes not long after rumors of GM selling off Opel had arisen again in recent months. There had been much speculation that Akerson had grown tired with Opel’s perpetual losses, and was mulling selling the organization to a Chinese company. This would not be the first time GM had been on the brink of selling off Opel: in 2009, GM abruptly ended a deal with Magna International that would have spun off more than half of the brand to the Canadian supplier. Opel also faced a rocky time during GM’s bankruptcy and restructuring, with European governments refusing the carmaker’s requests for federal loans.
According to GM Europe president Nick Reilly, Opel is now poised for a profitable turnaround. “In 2012, we won’t have those restructuring charges. They’re mostly done. We’ll get the full 12-month benefit of the restructuring we’ve done,” Reilly told Bloomberg. Minus some costs, GM expects the European operations to be fully profitable – and more than just break-even – by the end of this year.