DETROIT: General Motors Co on Tuesday reported a higher-than-expected quarterly profit, driven mostly by highly lucrative pickup truck sales in the U.S. market and in part by revaluations of shares it holds in ride-hailing company Lyft Inc and Peugeot SA.
The company’s share’s were down 1.6 percent in opening trading.
The earnings came despite a 7 percent decline in U.S. new-vehicle sales in the first quarter, in which smaller rival Fiat Chrysler Automobiles NV’s pickup trucks outsold GM’s.
The higher profit also happened even though sales in China dropped almost 20 percent and profit there declined 37 percent. Auto sales in China industrywide fell 2.8 percent last year and again in the first quarter.
GM Chief Financial Officer Dhivya Suryadevara told reporters that the Chinese market remains “volatile.”
“From an economic standpoint, there are green shoots,” she said. “But we have yet to see that translate to vehicle demand.”
GM will launch 20 new models in China in 2019, most of them in the second half of the year.
In the United States, the automaker had around four months supply of its Chevrolet Silverado pickup truck on the ground as of the beginning of April, a high level in an auto market that overall is expected to decline in 2019.
CFO Suryadevara said that the company’s inventory would be brought down over the course of the year without use of heavy consumer discounts.
She said that tariffs and higher commodity prices would cost GM around US$1 billion in 2019.
GM said it is “bullish” on pickup truck sales for the rest of 2019 as more versions of its new Silverado hit dealer showrooms and its heavy-duty trucks launch in the second half of the year.
Last week, rival Ford Motor Co reported a higher-than-expected first-quarter profit on strong pickup truck sales in its core U.S. market and said it was confident its 2019 results would be better than those of last year.
Last November, GM said it would close five North American plants because of a declining market for traditional gasoline-powered sedans. The move, coming as GM ramps up investment in electric and autonomous vehicles, brought widespread criticism, including from U.S. President Donald Trump.
GM reiterated on Tuesday that it is “committed to making job opportunities available for all 2,800 U.S. hourly employees impacted.”
GM reported a first-quarter net profit of US$2.2 billion, or US$1.48 per share, up from US$1.05 billion, or 72 cents per share, a year earlier.
Excluding one-items, the company earned US$1.41 per share. Analysts on average expected US$1.11.
The company’s revenue for the quarter fell to US$34.9 billion from US$36.1 billion a year earlier.
GM has preferred shares in Peugeot from when it sold its German Opel unit to the French automaker in 2017. Lyft completed an initial public offering at the end of the first quarter and the value of GM’s stake rose US$300 million. The increased value of those stakes added 31 cents per share to GM’s first-quarter profit.
(Reporting By Nick Carey and Ben Klayman; Editing by Steve Orlofsky)
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