GM exceeds estimates on truck sales, China stability
General Motors reported third quarter profit that surpassed 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 tax.
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. EBIT, excluding about $1.5 billion in legal costs that is mostly related to the small-car ignition-switch recall, totaled $3.1 billion.
GM's profits rebounded from a year earlier as US 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 sport utility vehicles.
The Detroit-based automaker's North American earnings before interest and tax were a record $3.3 billion.
"These results reflect on our work to capitalize on our strengths in the US and China," Chief Executive Officer 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 its China joint venture slipped to $467 million.
Auto sales have struggled in the market, with GM's sales falling 4.2 percent in the quarter.
GM is keeping profits afloat with crossovers such as the Chevrolet Trax and Buick Envision representing more than 17 percent of sales by GM and its joint ventures in September, up from 6 percent a year earlier.
In the quarter, GM took a hit of $1.5 billion related to its ignition switch recall, with $900 million going to a settlement with the US 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.
(China Daily 10/26/2015 page18)
