GM Profit Beats Expectations on Strong Truck Sales
General Motors Co. reported third-quarter profit that beat analysts’ estimates as strong light-truck sales in the United States and stable operations in China produced a record $3.1 billion in adjusted earnings before interest and taxes.
The company said adjusted earnings per share were $1.50, beating the $1.19 average of 16 analyst estimates. The company credited strong margins in North America and only a slight decline in China, where auto sales have struggled.
GM’s profit rebounded from a year earlier as U.S. buyers continue their love affair with trucks and the nation’s largest automaker overcame a tough car market in China by boosting sales of more-expensive SUVs. The Detroit-based automaker’s North American earnings before interest and taxes were a record $3.3 billion.
“These results reflect on our work to capitalize on our strengths in the U.S. and China,” CEO Mary Barra said in a statement. “GM is a vastly different company today than it was five years ago.”
The company’s equity income from the China joint venture slipped to $467 million. Auto sales have struggled in the market, with GM’s sales falling 4.2% in the quarter. The automaker is keeping profits afloat with crossovers such as the Chevrolet Trax and Buick Envision representing more than 17% of sales by GM and its joint ventures in September, up from 6% a year ago.
In the quarter, GM took a charge of $1.5 billion related to its ignition switch recall, with $900 million going to a settlement with the U.S. Department of Justice and the rest to settle lawsuits related to death and injury cases.
In Europe and South America, where GM has struggled to make a profit, the company continues to lose money. The European business cut its losses nearly in half from a year ago to $231 million, while GM lost $217 million in South America. In the same quarter last year, GM lost $32 million in South America.
