GM reports record revenue
LORDSTOWN — General Motors reported a record profit for the third quarter of this year that doubled results of the same period a year ago.
GM, which manufactures its popular small car the Chevrolet Cruze at its local assembly plant in Lordstown, attributed its strong earnings to “robust retail sales in the United States, strong performance in China, growth in wholesale volume and effective cost performance.”
The results were announced during the company’s earnings report Tuesday. The Detroit automaker posted third-quarter net income of $2.8 billion, or $1.76 per share, an increase of 104 percent over $1.36 billion, or 84 cents per share, a year ago. Revenue hit a record $43 billion, up 10.3 percent.
The performance is largely because the company shunned low-profit sales to rental car companies in the United States, keeping prices and profits high. GM also made $500 million off its Chinese joint venture and reduced losses by about $100 million each in Europe and South America.
“Our record third quarter, led by strong performance in the U.S. and China, reflects our determination to deliver on our commitments,” stated Mary Barra, GM chairwoman and chief executive officer. “We will continue executing our plan to deliver earnings that enhance shareholder returns.”
Chuck Stevens, chief financial officer, said the company is “Very much on track to deliver the performance that we promised at the beginning of the year, which is higher profit, higher margins. In essence, another record year.”
The numbers came despite sales falling 4 percent through September in the United States, GM’s most lucrative market, and market share dropping almost a full percentage point year-over-year to 16.9 percent. And it came despite worries about increased competition nationwide with automakers fighting over a slightly smaller pie.
Overall, sales by the Big Three — GM, Ford and Fiat Chrysler — have hit a post-recession plateau after last year’s record of 17.5 million.
Ford, which is expected to release its third-quarter results Thursday, already is feeling the pain, with slower sales forcing it to temporarily idle four factories.
Fiat Chrysler Automobiles on Tuesday reported an adjusted net profit of $660 million, compared with a loss of $422 million in the same period last year. Revenues were flat at $29 billion, with deliveries down marginally to 1.12 million units.
But at GM, revenue rose 10 percent over a year ago largely because it’s getting stronger prices for cars and trucks in North America. Pickup sales are still healthy, and the company rolled out strong new vehicles such as the Chevrolet Malibu midsize car and the Cadillac XT5 SUV, GM said. GM’s net income for North America was $3.5 billion for the quarter, up from $3.3 billion reported for the same period in 2015, and $9.4 billion year-to-date, up from $8.3 billion over last year.
Although overall sales dropped, Stevens said GM raised its U.S. share of the more profitable retail sales to individual buyers by 0.5 percentage points. He expects pickup sales to remain strong but says the company will balance supply and demand.
It all fueled a record North American pretax profit of $3.5 billion, giving the region an 11.2 percent profit margin, or the percent of revenue that the company gets to keep.
Excluding a 4-cent benefit from an unspecified ignition-switch recall recovery, GM earned $1.72 per share. That soundly beat Wall Street estimates of $1.46 per share.
Wall Street, though, was still cautious on GM stock. Shares fell $1, or 3 percent, to $31.99 in morning trading. They’ve ranged from $26.69 to $36.88 during the past year but recently have been below the company’s $33 initial public offering price in 2010.
GM also said it completed a $5 billion stock buyback a quarter early during the July through September period. Stevens said the company will start on its second round of buybacks worth $4 billion in the fourth quarter.
GM leaders said the company sold 2.4 million vehicles globally, up 3.8 percent, or by 88,430 units, year over year. In the first nine months of 2016, GM sold 7.2 million vehicles worldwide, up 0.4 percent, or 25,938 units, over the same period last year.
The Chevrolet brand topped GM’s global sales chart with more than 1 million units sold in the third quarter of 2016, despite a drop of 4.2 percent, or 45,594 vehicles. Year-to-date, Chevy fell 9.1 percent in sales.
The Baojun, a Chinese automobile marque owned by a joint venture of GM and SAIC Motor, SAIC-GM-Wuling Automobile, saw the most growth globally for the quarter, with a 42.3 percent increase. In the first nine months of 2016, the vehicle had a 64.6 percent sales increase. Buick placed second with increases of 20.8 percent and 22.8 percent for the quarter and year-to-date, respectively.