General Motors profits boom ahead of flotation

Bailed-out car giant General Motors today posted its biggest quarterly profit in six years, just one day ahead its planned flotation that will allow the US taxpayer to end its majority ownership.

Second-quarter profit was $1.3 billion (£833.4 million), boosted by cost cutting measures while it was in bankrupcty protection. Europe, however, suffered losses of $160 million.

Chief executive Ed Whitacre said last week that the company was eager to sell shares in an initial public offering so it can end its dependence on the US government and pay off $43.3 billion in bailout funds that were converted into a majority stake in the company.

Whitacre said the "Government Motors" tag with which the firm has been labelled is hurting sales and the company's image.

However, the timing is still not right for GM to sell shares in the next few months because of the sputtering economy, according to Scott Sweet, senior managing partner of IPO Boutique in Florida, which advises investors on IPOs.

"The numbers are good. You can't argue that," he said. "There is a huge incentive to have an IPO of GM, but it also must work."