GM backs tax overhaul but says it has better deal
Don’t expect General Motors to benefit anytime soon from President Trump’s push for tax changes. It has a better deal.
The automaker is still reaping tax benefits from the disastrous era leading up to its bankruptcy and federal bailout in 2009.
Although GM supports Trump’s bid to lower the corporate tax rate, Chief Financial Officer Chuck Stevens said Friday that it wouldn’t affect the automaker for at least five years.
Under a tax ruling issued during the Obama administration, GM is allowed to use pre-bankruptcy losses to offset future tax bills. That’s an extra sweetener for the new, post-bankruptcy GM, which is a vastly more efficient, innovative and profitable company than the shadow of its old, pre-bank-rut-ptcy self.
The new GM continues to capitalize on Americans’ desire for crossovers, sport-utility vehicles and pickups. That was exemplified Friday by the company’s earnings report. GM posted net income of $2.6 billion, up 33% from the same period a year ago. The company said North American sales of trucks and SUVs and a strong performance in China fueled the solid quarter.
The company’s first-quarter profit is a record for the automaker since its emergence from bankruptcy in 2009 and compares with the $1.9 billion it earned during the same period a year ago.
GM’s stock rose 0,3% Friday to close at $34.64, up 10 cents.
“From our perspective, it was a strong quarter that sets us up for a good year,” Stevens said.
The automaker’s performance translated into earnings of $1.70 per share, easily beating Wall Street’s expectations, which, on average, projected GM would earn $1.48 per share.
The profit is notable since industry sales in the USA are beginning to fall after a seven-year period of sustained growth. GM’s earnings report came one day after Ford’s first-quarter profits fell 35% to $1.6 billion.
GM spokesman Tom Henderson said it was the eighth consecutive quarter the automaker beat Wall Street expectations.
GM said its global revenue increased 10.6% to $41.2 billion.