GM earnings down 32% but better than expected
DETROIT: ENERAL MOTORS earned $2.5 billion before taxes in the third quarter, down 32 per cent from its $3.7 billion year-earlier pretax earnings but better than most Wall Street analysts were expecting.
On a net-income basis, the automaker lost $3 billion, but that reflected $5.4 billion in accounting charges for the sale of its Opel and Vauxhall European brands to PSA Group.
“We are managing the business with discipline to drive strong performance today, while investing in higher-return opportunities, including those that will shape the future of transportation,” said Chairman and CEO Mary Barra, in a release.
GM warned in July that its profits might decline in the second half of 2017 as it cut production of slower-selling cars and retooled several plants for production of new crossover and SUV models.
GBEATNG EXPECTATIONS
Even so, the results for the July-to-September period translated to $1.32 per share, beating Wall Street’s expectations. Analysts, on average, were forecasting between $1.11 and $1.15 per share.
Investors have taken a brighter look at GM in recent months, largely because of a perception that the company is moving quickly in developing autonomous mobility technology. In early 2016, the largest US automaker invested $500 million in ride-hailing business Lyft and acquired Cruise Automation, a San Francisco-based company focused on autonomous vehicle technology.
GM shares have risen about 30 per cent so far this year. Investors responded to Tuesday’s results by driving the price up 2.9 per cent to a close of $46.48.
The automaker’s automotive sales fell 16.6 per cent in the quarter to $30.5 billion from $36.5 billion a year earlier. That reflects GM recent decisions to leave several markets, including Europe, India, and South Africa. GM also has wound down production in Australia, ending it completely on October 20
The bulk of GM’s thirdquarter profit once again came in North America, where its US sales rebounded in August and September after falling in July.
GM and other automakers are expecting US sales to slow gradually, and GM continues to adjust to consumers’ shift from passenger cars to trucks, SUVs and crossovers. It has cut production at plants in Michigan, Missouri, and Ohio and recently said that it would slow production at its DetroitHamtramck factory due to weak sales of the sedans built there. Workers there also will have an extended Christmas break starting November 13.
WORK RESUMED
Last month, about 2,800 workers at a GM assembly plant in Ingersoll, Ontario, returned to work after a one-month strike over GM’s decision to move production of the GMC Terrain to Mexico. That left the plant with just one model, the Chevrolet Equinox. The strike ended when GM told members of Unifor, the Canadian auto union, that it was prepared to close the plant permanently.
Any financial impact from the strike will be reflected in fourth-quarter earnings.