By Tom Krisher
AP Auto Writer
DETROIT (AP) - General Motors doesn't seem too worried about slowing U.S. auto sales or economic troubles in Europe. If third-quarter numbers are any indication, the company has numbers to back that up.
The Detroit automaker reported a record profit on Tuesday that doubled results in the third quarter a year ago. And the automaker put a little more swagger behind its full-year guidance, predicting pretax earnings at the high end of previous forecasts of $5.50 to $6 per share.
GM earned $2.77 billion, or $1.76 per share, compared with $1.36 billion, or 84 cents per share a year ago. Revenue hit a record $42.8 billion.
The performance is largely because the company shunned low-profit sales to rental car companies in the U.S., 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.
"Very much on track to deliver the performance that we promised at the beginning of the year, which is higher profit, higher margins," Chief Financial Officer Chuck Stevens said. "In essence, another record year."
The numbers came despite sales falling 4 percent through September in the U.S., 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 in the U.S. with automakers fighting over a slightly smaller pie. Sales have hit a post-recession plateau after last year's record of 17.5 million. Crosstown rival Ford already is feeling the pain with slower sales forcing it to temporarily idle four factories.
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.
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. The margin is the percent of revenue that the company gets to keep.
Stevens said prospects are good, too, because GM is rolling out important new vehicles. "We're entering the heart of our product launch cadence," Stevens said, adding that within the next 18 months, GM will replace its compact and midsize crossover SUVs in the hottest part of the U.S. market.
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 $1.23, or 3.7 percent, to $31.76 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.
Jefferies analyst Philippe Houchois said he's concerned that the company pulled fourth-quarter sales forward. He has a "Hold" rating on the stock with a $33 one-year price target on concerns that sales have peaked in North America.
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 tranche of buybacks worth $4 billion in the fourth quarter.
Published: Thu, Oct 27, 2016
