GM earnings rise 1% as pickup pricing overcomes weaker sales
August 1, 2019 by Tom Krisher The Associated Press
August 1, 2019 – General Motors said Thursday that higher prices for popular pickup trucks and SUVs helped overcome slowing global sales and profit rose by one per cent in the second quarter.
The Detroit automaker said it made $2.42 billion, or $1.66 per share, from April through June. Adjusting for restructuring costs, GM made $1.64 per share, blowing by analyst estimates of $1.44.
Quarterly revenue fell two per cent to $36.06 billion, but still beat estimates. Analysts polled by FactSet expected $35.97 billion.
Global sales fell 6% to 1.94 million vehicles led by declines in North America and Asia Pacific, Middle East and Africa. The company says sales in China were weak, and it expects that to continue through the year.
In the United States, customers paid an average of $41,461 for a GM vehicle during the quarter, an increase of 2.2 per cent, as buyers went for loaded-out pickups and SUVs, according to the Edmunds.com auto pricing site. The U.S. is GM’s most profitable market.
Chief Financial Officer Dhivya Suryadevara said she expects the strong pricing to continue, especially as GM rolls out a diesel pickup and new heavy-duty trucks in the second half of the year.
“We think the fundamentals do remain strong, especially in the truck market,” she said, adding that strength in the overall economy and aging trucks now on the road should help keep the trend going.
Light trucks accounted for 83.1 per cent of GM’s sales in the quarter, and pickup truck sales rose 8.5 per cent as GM transitioned to new models of the Chevrolet Silverado and GMC Sierra, according to Edmunds, which provides content to The Associated Press.
As usual, GM made most of its money in North America, reporting $3 billion in pretax earnings. International operations including China broke even, while the company spent $300 million on its GM Cruise automated vehicle unit. Its financial arm made $500 million in pretax income.
Suryadevara said GM saw $700 million in savings during the quarter from restructuring actions announced late last year that included cutting about 8,000 white collar workers through layoffs, buyouts and early retirements. The company also announced plans to close five North American factories, shedding another 6,000 jobs.
About 3,000 factory workers in the U.S. whose jobs were eliminated at four plants will be placed at other factories, but they could have to relocate.
GM repeated its guidance for full-year adjusted pretax income of $6.50 to $7 per share. Shares rose more than two per cent at the open of trading on Wall Street.