Will GM Be Profitable by 2011?

General Motors offered its first prediction of when the new GM will be profitable yesterday, stating that the new company will likely post a profit of about $3 billion before taxes in 2011. In addition, GM is anticipating that the company will be worth about $48 billion when it emerges from bankruptcy.

If GM’s estimates prove correct, the government’s 60.7 percent stake in the automaker will be worth about $29 billion. Including an additional $8.8 billion in debt and preferred shares, the government stands to lose about $12 billion from its roughly $50 billion investment in GM. The UAW trust fund’s 17.5 percent stake, combined with $9 billion in debt and preferred shares, would amount to $17.4 billion, $3 billion short of what it was owed before GM entered bankruptcy.

The predictions come from GM’s financial adviser, Evercore Partners. Evercore forecasts a loss of $17.5 billion this year, as well as $7.8 billion in profits by 2014. The figures count on the annual sales rate in the U.S. to climb back up to 16 million in 2012 from a predicted 9 million this year.

GM estimates that it will manufacture 3.8 million vehicles this year, a figure that will increase to 6 million by 2014.

Source: The Detroit Free Press