GM quarterly profit falls but beats Wall Street estimates
Apr 27, 2018, 01:46
The Detroit automaker also announced that it was reducing its North American auto lineup to the Mustang and a Focus Active crossover in a bid to boost production of trucks and SUVs.
"We believe the stock will be under pressure today given", GM's lower pre-tax profit and a "significant cash burn" during the first quarter", Buckingham Research Group analyst Joseph Amaturo wrote in a client note. Chief Financial Officer Chuck Stevens said the production drop had resulted in a drop in pre-tax profit of up to $800 million.
General Motors Company (NYSE:GM) has exceeded expectations for the first quarter, and the company is pointing to strong sales of its crossovers as a catalyst.
Earnings came in at $1.43 per share, adjusted vs. $1.24 per share forecast.
General Motors reported a big drop in first-quarter profits Thursday due to costs connected with shuttering a plant in South Korea, but auto sales rose in the United States and China. Worldwide sales were down 5.6% year over year and North American sales were down 5.2%.
The expenses will go for severance and other costs associated with the closure, GM said.
On Wednesday, rival Ford said it would stop investing in most traditional passenger sedans in North America.
GM benefited from a lower effective tax rate in the quarter, but adjusted pre-tax margin fell to 7.2 percent from 9.5 percent a year earlier.
Earlier this year, GM said its 2018 profits would be flat compared with 2017, but expected its all-new pickup trucks would boost margins starting in 2019. "But we are confident we can continue to offset that".
GM said it earned 1.43 USA dollars per share on revenue of 36.1 billion dollars, which was better than 1.24 dollars analysts were expecting. Analysts had on average expected earnings per share of $1.24.
Total automotive revenues came to $32.72 billion in the quarter, down about 5.6% from $34.65 billion in the first quarter of past year.
"We are on plan to deliver another strong year in 2018", a statement from Chairman and CEO Mary Barra read in part.
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