GM profit races past expectations, sees strong full year
DETROIT (Reuters) - General Motors Co (GM.N) on Wednesday posted far stronger-than-expected quarterly profit and said its full-year earnings forecast would come in at the high end of its forecast due to strong demand in North America, driven by its new pick-up trucks.
FILE PHOTO: The GM logo is seen at the General Motors Lansing Grand River Assembly Plant in Lansing, Michigan October 26, 2015. REUTERS/Rebecca Cook/File Photo
GM shares jumped more than 8 percent in pre-market trading.
The Detroit automaker was able to push through higher pricing, mostly in North America, allowing it to benefit by $1 billion in the quarter, offsetting higher commodity costs. Those pricing gains are “absolutely sustainable,” GM Chief Financial Officer Dhivya Suryadevara said.
“We had strong execution despite the challenges that we faced. Revenues up, profits up, margins up,” Suryadevara told reporters at the company’s Detroit headquarters.
Slowing demand in China, the world’s largest auto market, has begun to hurt the auto industry, but GM still was able to report record equity income in the quarter from its operations there. With U.S. interest rates rising and the region having seen strong industry sales for several years, many believe U.S. demand also will begin to slow.
The No. 1 U.S. automaker said it still sees a full-year profit in the range of $5.80 to $6.20 a share, but said it now expected to finish at the high end of the range with potential to finish even higher. It cited a favorable tax rate and its strong performance.
In July, GM lowered its full-year forecast, citing higher steel and aluminum costs due to tariffs imposed by U.S. President Donald Trump’s administration.
GM reported third-quarter net income of $2.53 billion, or $1.75 a share, compared with a loss last year of $2.98 billion, or $2.03 a share. Last year’s quarter included a charge related to Europe.
Excluding one-time items, GM earned $1.87 a share in the third quarter, easily beating the $1.25 analysts polled by Refinitiv estimates had expected.
Revenue in the quarter rose 6.4 percent to $35.8 billion, above the $34.85 billion analysts had expected.
Reporting by Joe White and Ben Klayman in Detroit; Editing by Nick Zieminski
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