GM Posts Strong Profit Beat, Reassuring Sign in Shaky Market

GM Posts Strong Profit Beat, Reassuring Sign in Shaky Market

GM continues to get better pricing from a consumer shift to trucks and sport utility vehicles.

General Motors Co. (IW 500/4) reported fourth-quarter earnings that blew away estimates and reiterated the upbeat profit forecast for 2019 it gave last month. 

The quarterly statement is good news for GM in an increasingly challenging environment. Global carmakers are fighting through slowing demand in all their major markets and a trading war between the U.S. and China. Just a few hours ago, Daimler AG said it’s preparing a “comprehensive” cost-cutting program to help cope. 

GM continues to get better pricing from a consumer shift to trucks and sport utility vehicles.

Earnings were $1.43 a share last quarter, compared with the $1.25 average of analysts’ estimates. Less than a month ago, the carmaker had given investors a lengthy presentation and projected that earnings would rise to as much as $7 a share.

The $6.54 a share for 2018 earnings was far better than the original guidance of $6 thanks in large part to pickup sales, CFO Dhivya Suryadevara said on a conference call.

GM continues to get better pricing from a consumer shift to trucks and sport utility vehicles.

Investors have been focusing on slowing demand in China, the world’s biggest car market. GM said the Chinese auto market will be flat this year. Its income from the region fell to $307 million in the quarter from $504 million a year earlier. GM is taking actions to cut costs in China to improve profits in a softening market, Suryadevara said.

Market Reaction

The shares rose 2.5% to $40.62 in early U.S. trading. Through Feb. 5, they had soared 13% since Jan. 10, the day before GM gave its surprise upbeat profit forecast for 2019.

By David Welch

 

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