General Motors Co (GM.N) on Thursday reported a higher-than-expected profit in the third quarter and said it had strong demand for its redesigned full-size pickup trucks in North America.
“Solid results really continue to be driven by strength in North America and China,” GM Chief Financial Officer Chuck Stevens told reporters at the company’s Detroit headquarters.
“Clearly, high transaction prices – the new trucks and SUVs are more profitable than the ones they replace – that certainly helps,” he added.
The stock rose 2.5 percent to $32.10 in premarket trade.
Higher pricing on GM’s vehicles resulted in a $600 million gain in the quarter. It launched new versions of its full-size Chevrolet Silverado and GMC Sierra pickup trucks last year and followed those with other updated SUVs on the same vehicle platform earlier this year.
Stevens said GM, the No. 1 U.S. automaker, remained on or ahead of its financial forecast from January, when it said it would see a slight increase in pretax profit this year.
The quarter did not include any charges for costs related to the record number of recalls this year as the company has already booked them. The massive recall for defective ignition switches are linked to at least 29 deaths.
Net income rose to $1.38 billion, or 81 cents a share, from $698 million, or 45 cents a share, a year earlier.
Excluding one-time items, GM earned 97 cents a share, 2 cents above what analysts expected, according to a poll by Thomson Reuters I/B/E/S.
The quarter included $300 million in special items for flood damage sustained at the company’s technical center outside Detroit and the writedown of assets in Russia.
Revenue rose slightly to about $39.3 billion from $39 billion. Analysts expected $39.8 billion.
GM reported a profit margin of 9.5 percent in North America, the fifth consecutive quarter of year-over-year growth. Excluding recall-related costs, the second quarter’s margin in the region was 9.2 percent.
GM said average transaction prices in the U.S. market and vehicle sales in China reached record highs in the third quarter. It is getting almost $4,000 more per full-size pickup than it was before the new model was introduced.
In North America, operating earnings in the quarter rose 12 percent to $2.45 billion
Earnings at GM’s international operations, including China, fell about 20 percent to $259 million. However, GM’s equity income in China rose 14 percent to $484 million, and the profit margin rose slightly to 9.6 percent.
The loss in Europe, which included $200 million in restructuring costs, widened to $387 million from $238 million last year as the Russian market continued to struggle. Stevens said GM’s Opel/Vauxhall brands in the region gained market share in the quarter. GM has said it will return to a profit in Europe in 2016.
GM posted a loss of $32 million in South America compared with a profit of $284 million a year ago due to weakness in the region that has dragged down the industry. Stevens said GM remained focused on cutting costs by slashing material expenses, reducing shift work and signing more cost effective labor deals.
REUTERS
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