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Mayank Marwah
Mayank Marwah
Articles (627) 

General Motors Beats on Earnings

Company sees crossovers to drive growth in 2018

February 07, 2018 | About:

The top U.S. automaker General Motors (NYSE:GM) posted robust fourth-quarter earnings surpassing estimates on Tuesday. The company cited robust sales of new crossovers along with strong pricing and cost reductions. The company expects 2018 to be a strong year as well with focus on proper allocation of its capital spending. The company says that it expects capital spending of $8 billion, $1 billion of which would be invested in autonomous vehicles.

Bird’s-eye view

The automotive giant’s fourth-quarter adjusted earnings per share (EPS) came in at $1.65, which was above the analysts’ expectation of $1.38 per share. As a matter of fact, revenue stood at $37.7 billion versus $36.55 billion forecasted. Full-year EPS was $6.62 per share, up 8.2% from 2016. Revenue for 2017, however, decreased 2.4% to $145.6 billion.

The company registered a net loss of $4.9 billion or $3.46 a share during the quarter. By contrast, the company witnessed pretax profit of $12.8 billion for the whole year. General Motors would give a bonus of $11,750 to the union workers on February 23.

The company’s wholesale volumes plunged 1.24 million units from 1.41 million units reported in the fourth quarter of 2016. Moreover, worldwide retail sales came in at 2.59 million units, down 9.1% from Q4 of 2016. The company had a worldwide market share of 10.3% in Q4 of 2017 which was slightly down from 11.3% in Q4 of 2016.

At the end of 2017, the Detroit-based automaker had cash and cash equivalents of $15.5 billion whereas during the same period last year, it was $12.6 billion. Adjusted automotive cash flow was $4.2 billion, which translates to 68% gain from the same period in 2016.

Segment details

In North America, the company generated fourth-quarter revenue of $28.8 billion, down 8% from the same period in 2016. Moreover, pretax profit came down to $12 billion.

In the International segment, the company’s revenue came in at $5.7 billion for the quarter, which represent a decline from $6 billion reported in the year-ago quarter.

The company’s financial segment saw revenue of $3.23 billion during the quarter, up 24.2% from the same period in 2016.

Expectations

The company sees sales of its new and refreshed crossovers such as the Chevrolet Traverse, Buick Enclave and GMC Terrain to rise and dominate each market segment. Cadillac has also seen gains especially in the U.S. where its sales soared 73%. Cadillac has left a mark in China. The company forecasts the luxury brand’s global profits to double by 2021. The company would also roll out Cadillac XT4 crossover in 2018.

As far as the China segment is concerned, the company would launch 15 new models under the brands- Cadillac, Buick, Chevrolet, Baojun and Wuling.

Disclosure: I do not hold any position in the stock mentioned in this article.

About the author:

Mayank Marwah
A seasoned writer with keen interest in the automotive, technology, telecommunication, retail and aerospace sectors.

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