GM CEO Mary Barra is offering a positive assessment of the maker's third-quarter earnings.
Battered by recalls and facing challenges in markets as diverse as China, Russia and South America, General Motors nonetheless managed to beat expectations with its third-quarter earnings report, though revenues fell short.
The maker delivered net income of $1.4 billion, or 81 cents a share after factoring in one-time special items that had a $300 million, or 16-cent per share, impact on the bottom line. Factoring in those one-time costs, GM would have earned 97 cents a share, up slightly from 96 cents a year earlier – and two cents above the consensus estimate of industry analysts, according to Thomson Reuters.
“Strong global sales and growing margins in North America and China helped GM deliver very solid third quarter results,” GM CEO Mary Barra said in a prepared statement accompanying the July to September earnings results. “Despite industry challenges in Russia and South America, our earnings were on plan as we continue to execute our customer-focused strategy.”
Net revenue for the third quarter came to $39.3 billion, a modest $0.3 billion increase from the year-earlier number. That was short of the consensus estimate of $39.84 billion. But it also suggested that GM did not take a major blow as a result of its ongoing recall problems.
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Industry analysts Joe Phillippi said he was “definitely” pleased not to see a more significant hit in the U.S. from the recall crisis that has seen GM recall more than 40 million vehicles worldwide, most of them in the home market, since the beginning of 2014. On a global scale, “They’re showing some continued, steady progress in the face of continuing problems around the world,” added Phillippi, the head of AutoTrends Consulting.
The auto industry, as a whole, has been facing tough times in a number of regions, including South America – where GM managed to break even – and Russia, where overall car sales are expected to fall by a third for the full year as a result of sanctions punishing the country for its involvement in the Ukranian crisis.
GM is facing continuing challenges in China, now its largest global market, and has slipped to second place behind rival Volkswagen AG. But earnings from the booming Asian market were still strong enough to help prop up the maker’s bottom line.
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North American operations reported an EBIT-adjusted income of $2.5 billion, up from $2.2 billion during the third quarter of 2013.
“Strong performance in North America, where we achieved a 9.5 percent margin, anchored our overall results,” said Chuck Stevens, GM executive vice president and chief financial officer.
An ongoing problem for GM has been its European operations which have run up billions of dollars in losses after 14 years in the red. The maker recently advised investors and analysts that its latest turnaround effort is on track. But GM Europe still went $0.4 billion into the negative column for the third quarter, on an EBIT basis, compared to a $0.2 billion deficit last year. The new figure includes a $0.2 billion restructuring charge, however.
“Slowly and steadily, they’re getting better in Europe, and keeping the losses to a minimum was an accomplishment in itself,” added Phillippi.
GM has promised a turnaround in Europe for years, so it is far from certain it will deliver one now. And there are plenty of other challenges facing the maker around the world. Among other things, it has a wide range of new products coming to market in the months ahead.
“We remain focused on flawlessly launching key vehicles globally in the coming months, while delivering a positive experience for our customers,” promised CFO Stevens.
Many of those products – from the next-generation Chevrolet Volt to a new high-performance version of the Cadillac ATS — are coming to showrooms in the U.S. And the home market faces some of the biggest challenges. Not only is competition severe, but GM continues to have to deal with ongoing safety-related problems.
Despite assurances that the worst of its recall crisis is over, it continues to announce new service actions, such as the embarrassing recall last week of its new – and well-reviewed – midsize pickups.
There is an ongoing Justice Department criminal investigation that could lead to a fine of more than $1 billion, observers predict, or worse. And there are numerous lawsuits, including one for as much as $10 billion recently filed in Manhattan federal court. A special victims’ compensation fund set up to cover those involved in crashes caused by a defective ignition switch has so far confirmed at least 27 fatalities and is expected to eventually pay out at least $400 million.
But the fact that GM’s U.S. sales have not shown a marked tumble despite the hit to the company’s reputation, is considered a positive omen that it can work its way through the crisis, the worst since the maker emerged from bankruptcy in July 2009.
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Mo Money for the paid liars to try and steal. Perhaps GM should donate $10.5 Billion to U.S. tax payers since they cheated us out of it with the bailout LOAN.
at,
Good godh, enough about the bailout! A lot of people are working now that would have been unemployed and collecting unemployment or welfare, and you would have been griping about that too. The baikout saved jobs directly at the company and indirectly at the suppliers, and kept a lot of other jobs going in retail and other businesses that would have been gone otherwise. If you figure 180 to 190 million taxpayers, that $10 billion dollars was a pittance, probably less than $75 per taxpayer amortized over several years. It’s done, it’s over, it’s history. GM and Chrysler are making money, workers ate working and spending money, and that’s a good thing.
I supported the LOANS as did many tax payers to keep American jobs. We as tax payers expected GM and Chrysler to FULLY repay the loans. NEITHER DID! That’s a failure of our government and GM/Chrysler.
Do you know what GM did with a lot of the U.S. tax payer money? They spent it in CHINA to expand their operations in CHINA. Do you know that GM has publicly announced in CHINA that they are planning to move as much of their U.S. design and engineering staffs to CHINA as possible?
Being in DENIAL about the unscrupulous activities of politicians and auto makers shows your lack of knowledge on the subject matter. Everything stated above has been documented. Do your homework and stop preaching to the choir when you are clueless on the subject. Trying to rationalize illegal and immoral behavior is futile and ignorant.
I am sorry, but count me among the optimists. If I weren’t, I’d blow my damn brains out from despair at the hypocrisy and lies. I see gas below $3. Milk down to $2.79. I am like all other voters – my politician isn’t one of the corrupt, lazy ones. The subsidy to one of the Paulsens for a soccer stadium is money well spent. He only has ONE billion, after all, and there are 500,000 of us. The real downside of this is that we had so much promise and potential as youngsters. What happened to us?