The top U.S. carmaker, General Motors (GM, Financial), recently released its third-quarter earnings, surpassing analyst estimates. The company’s adjusted earnings stood at $1.72 per share against consensus estimates of $1.44 per share.
Net income for the quarter was twice as large as last year. The Detroit automaker reported net income of $2.77 billion or $1.76 per share, while in the year ago quarter it was $1.36 billion or 84 cents per share.
Despite the strong numbers, General Motors failed to keep investors happy as the carmaker’s softening U.S. sales are becoming a concern. The company’s share price plunged 4.2% to $31.60, indicating investors’ doubts regarding a recurrent profit slump that could hit the automaker if numbers do not turnaround in the U.S. Here’s a lowdown on the company’s quarterly stats.
A bird’s eye view
General Motors recorded impressive third-quarter revenue that spiked 10.3% to $42.8 billion mainly on the back of production of vehicles that were supplied on lots to the company’s U.S. dealers. The automaker said that it had a good stock of vehicles in the U.S., around 110,000 more vehicles compared with the same period a year ago.
As far as the worldwide wholesale sales for the third quarter are concerned, units sold amounted to 1.58 million vehicles from 1.50 million vehicles sold in the previous year’s quarter. Moreover, global retail sales totaled 2.39 million vehicles from 2.38 million vehicles in the year-ago quarter. However, the company’s market share dropped to 10.7% from 11.1%.
General Motors’ operations in North America were supported by the strong pricing on its SUVs and pickups. Furthermore, they also witnessed fabulous profit margins in Chevrolet Malibu. In contrast, the company posted an operating loss of $142 million in Europe. The company’s revenue from operations in South America stood at an impressive $2.03 billion, up 16.7% from a year-ago quarter. Though the adjusted loss was 10 cents, it was lower as compared with the previous year as it sold more vehicles in Argentina and Brazil.
General Motors had cash and cash equivalents standing at $15.9 billion whereas total debt was $79.1 billion. Through the first three quarters of the year, net cash from operating activities was $12.5 billion compared with $9.5 billion the previous year same period. Capital expenditure during the first nine months was $6.84 billion.
Looking ahead
Going forward, General Motors is remaining focused on investing in inventive technology, particularly autonomous cars, for attaining sustainable growth and enhancing shareholder value. The automaker is bagging fresh contracts that should help widen its business. In addition, the company’s China operations are running quite smooth with record sales.
However, weak domestic volumes have raised concern among investors. In light of the sluggish U.S. scenario, crosstown rival Ford (F, Financial) warned investors that the company might have to take a hit on its full-year profit. In contrast, General Motors CEO Mary Barra reassured its stakeholders that "we are working hard to make sure the core business is operating in a very disciplined fashion." General Motors expects to report a strong year as its pickups and trucks are registering great volumes and supporting the bottom line.
The company's third-quarter earnings and the financial position look sound. The company’s results for the full year rely on whether it will be able to meet its expectation in the U.S. market and see continued strength in China. The company is looking forward to building its own electric cars using autonomous driving technology. The company looks to finish the year on a positive note.
Disclosure: I do not hold any position in the stock/s mentioned in this article.
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