DETROIT (Reuters) – General Motors Co. (Reuters)GM.N) posted higher-than-expected quarterly earnings on Wednesday, saying that full-year earnings, driven by the new pick-up trucks, would be at the upper end of the forecast due to strong demand in North America.
FILE PHOTO: The GM logo will be shown at General Motors Lansing's Grand Lansing assembly plant in Lansing, Michigan on October 26, 2015. REUTERS / Rebecca Cook / File Photo
GM shares rose more than 8 percent ahead of the market.
The Detroit-based automaker was able to push higher prices, especially in North America, allowing it to capitalize $ 1 billion this quarter to offset higher raw material costs.
Sales of the major SUVs Chevrolet Tahoe, Suburban and GMC Yukon increased by about 12 percent. The company increased production of the new Chevy Silverado and GMC Sierra full-size pickup trucks.
"Overall, pressure should be a relief to the market today," said Joseph Spak, an analyst at RBC Capital Markets.
The prizes are "absolutely sustainable," said GM CFO Dhivya Suryadevara.
"Despite the challenges we faced, we had a strong implementation. Turnover increases, profits increase, profits increase, "Suryadevara told reporters at the company's headquarters in Detroit.
Falling demand in China, the world's largest auto market, has begun to affect the auto industry, but GM continued to record record capital gains from its business there. With rising US interest rates and the region, which has seen strong industry revenues for several years, many believe that US demand will also ease.
US auto maker # 1 said it still expects full-year earnings in the range of $ 5.80 to $ 6.20 a share, but was now expected to end up at the high end of the range, where the potential could be even higher. A favorable tax rate and strong performance were cited.
In July, GM cut its full-year forecast, pointing to higher steel and aluminum costs due to tariffs imposed by US President Donald Trump's administration.
Last week, Ford Motor Co (F.N) remained at the profit targets of the year despite higher raw material costs and declining demand in China. On Tuesday, Fiat Chrysler Automobiles (FCHA.MI) did the same.
GM posted net income of $ 2.53 billion, or $ 1.75 per share, in the third quarter, compared to a loss of $ 2.98 billion a year ago, or $ 2.03 per share. The past quarter contained a burden on Europe.
With the exception of one-off items, GM earned $ 1.87 per share in the third quarter, outperforming the analysts expected by Refinitiv at $ 1.25.
Quarterly revenue increased 6.4 percent to $ 35.8 billion, ahead of analysts' expected $ 34.85 billion.
Prices in North America reached a record level of more than $ 36,000 per vehicle in the third quarter, an increase of $ 800 per unit over the prior year. The operating profit of the region was $ 2.8 billion.
GM International posted operating income of $ 139 million for the quarter, boosted by record equity earnings in China of approximately $ 500 million, despite the slowdown there.
China's industry-wide passenger car sales fell sharply in September in nearly seven years, raising fears that the market may shrink for the first time in decades. Several automakers and suppliers have warned that China's stoppage will affect profits.
GM also said that GM's fourth quarter financial business will pay a dividend of $ 375 million to the parent company ahead of the 2019 target.
Reporting by Joe White and Ben Klayman in Detroit; Cut by Nick Zieminski