GM sets North American restarts

Quarter tops estimates despite coronavirus

DETROIT — General Motors Co on Wednesday reported a huge plunge in first-quarter profit that raced past expectations, and the automaker outlined plans for a May 18 restart of most of its North American plants shut down by the coronavirus pandemic.

The news sent GM shares up 8 per cent in pre-market trading.

The No. 1 U.S. automaker posted net income attributable to common stockholders of $247 million or 17 cents per share, down more than 88 per cent from $2.12 billion or $1.48 per share in the same period in 2019.

Excluding one-time items, GM reported 62 cents per share, higher than the 30 cents per share expected by Wall Street analysts.

The Detroit automaker has slashed costs and made other moves during the COVID-19 outbreak, including suspending its dividend and share buybacks, closing its Maven car-sharing unit, delaying work on some product programs, reducing marketing budgets and cutting white-collar workers’ salaries.

It also added $16 billion to its cash position by drawing down credit lines.

GM had previously suspended its 2020 profit outlook because of uncertainty over the outbreak and did not provide an update Wednesday.

Smaller U.S. rival Ford

Motor Co last month raised another $8 billion from corporate debt investors to further shore up its finances after previously drawing down its credit lines.

GM Chief Financial Officer Dhivya Suryadevara warned employees in an internal video on March 26 that “significant austerity measures” were necessary to avoid “serious damage” to GM’S longterm viability.

One ray of hope has been China, where the pandemic began but where GM has resumed production.

While first-quarter sales there fell 43 per cent, they rebounded to grow by double digits in April. That offers hope for the U.S. market, where sales declined 7 per cent in the first quarter.