General Motors Co posted a stronger-than-expected quarterly profit as it gained market share in North American and Asian markets, but backed away from its full-year break-even target in Europe due to deteriorating conditions there.

Shares in GM fell 4.2 percent in premarket trading.

GM executives said the No. 1 automaker has work to do to boost its profit margins.

GM delivered a solid quarter ... but solid isn't good enough; even in a tough global economy, Chief Executive Dan Akerson said in a statement.

Akerson said GM still needs to improve its profit margins, which were 6 percent in the third quarter compared with 6.7 percent last year.

GM emerged from bankruptcy in 2009 after a $52 billion taxpayer-funded bailout. The U.S. Treasury owns 32 percent of GM's common shares, and how it unwinds that stakes remains an unanswered question.

As GM's share price has slipped well below last fall's $33 initial public offering price, Treasury officials have maintained they will not rush to sell the government's stake.

Coming out of bankruptcy, Akerson and other executives said the company stripped out enough costs to make the business recession proof so it could thrive even in a weak auto market. They have repeatedly pointed to the company's fortress balance sheet.

On Wednesday, GM said it expects its fourth-quarter adjusted earnings before interest and taxes to be similar to the same quarter last year.

However, it backed away from its full-year target for Europe, saying it no longer expected to break even in Europe before restructuring costs due to deteriorating conditions there despite achieving that level through the first nine months. On Monday, GM announced it would change top executive in Europe.

We obviously have significant macroeconomic challenges to address, Chief Financial Officer Dan Ammann told reporters . We're not relying on the big pickup in volume in the industry to bail us out if you like and we're very much focused on getting the break even point down further so we can get to a point where we're sustainably profitable.

GM's net income in the third quarter fell to $1.7 billion, or $1.03 a share, compared with $2 billion, or $1.20 a share, in the year earlier period.

Analysts had expected 96 cents a share, according to Thomson Reuters I/B/E/S.

Revenue rose to $36.7 billion from $34.1 billion last year. That was in line with analysts' expectations.

The No. 1 U.S. automaker also said the underfunded status on its U.S. pensions stood at $8.7 billion at the end of September, down from $10.8 billion at the end of June. However, that was according to the valuation set at the end of 2010 and will be revalued at the end of this year.

GM's shares fell 4.2 percent to $24 a share in premarket trading from Tuesday's closing price on the New York Stock Exchange. Its shares are down 39 percent from this year's high reached in January, and down 27 percent since its IPO price of $33 a year ago.

(Reporting by Ben Klayman and Deepa Seetharaman in Detroit; Editing by Derek Caney)

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