DETROIT – Even with auto sales beginning to ebb in the U.S., China and elsewhere, General Motors posted a strong third-quarter profit, blowing past Wall Street expectations on rising prices in North America and surprising resilience in China.
GM reported a $2.5 billion third-quarter net profit Wednesday, or $1.75 per share. Excluding one-time items, the company made $1.87, far exceeding analyst projections of $1.25 per share, according to a survey by FactSet.
Revenue jumped 6.4 per cent to $35.8 billion, also topping forecasts. The Detroit automaker put up a record income of $500 million from July through September in China despite declining sales and rising trade tensions. And its pretax profit in North America, its most lucrative market, rose 33 per cent to $2.8 billion with a profit margin of 10.2 per cent.
Chief Financial Officer Dhivya Suryadevara said the company was helped in the quarter by getting strong prices across its model lineup, especially for the newly redesigned Chevrolet Silverado and GMC Sierra pickup trucks.
“Our discipline came through this quarter,” Suryadevara said, adding that she believes strong prices are sustainable as GM builds inventory of light-duty pickups and rolls out heavy duty versions. “We feel very confident about the pricing.”
The average sale price of a vehicle in the U.S. reached $36,000, $800 more than a year ago and a third-quarter record. CEO Mary Barra said GM will remain disciplined in the fourth quarter while being competitive in every segment.
The company also gave a more optimistic forecast for the full year, saying it expects pretax profits at the high end of its previous guidance of $5.80 to $6.20 per share as it rolls out the new pickups and does its best to battle higher commodity costs. “We’re controlling what we can control,” Suryadevara said. “We’ve had an intense focus on costs.”
The strong profit from GM’s China joint venture came even with a budding tariff war with the U.S. and uncertainty over sales in the world’s largest auto market.
GM shares jumped more than 6 per cent in premarket trading Wednesday to $35.70.
The strong performance came even though GM’s global retail sales to individuals dropped 15 per cent during the quarter, to 1.98 million vehicles. But sales to dealers, the point at which GM books revenue, rose 4.5 per cent, to 1.13 million.
GM was hit once again by costs associated with its giant recall for faulty ignition switches. The company posted a $440 million charge as it updated estimated costs for legal claims.
A year ago, GM posted a $3 billion net loss due to a $5.4 billion charge for selling Opel and Vauxhall to France’s PSA Group.