General Motors on Thursday reported third-quarter earnings that exceeded Wall Street expectations thanks to its highly profitable trucks and SUVs in North America.
The automaker's shares rose more than 7% during premarket trading before leveling off at around 6%.
Here are the numbers:
Adjusted earnings per share: $ 2.83 versus $ 1.38 expected based on average analyst estimates made by Refinitiv
Revenue: $ 35.48 billion versus $ 35.51 billion expected
GM declined to issue new earnings forecasts for the year, citing a number of "moving elements" such as potential incentives and the coronavirus pandemic. Mary Barra, CEO of GM, said the fourth quarter is unlikely to be as strong as the third quarter. She downplayed the possibility that the uncertain outcome of the presidential election could hurt sales for the rest of the year.
"When we look at the elections, we think that the extended period of time for the vote to be finalized was expected given the special circumstances surrounding this election," Barra said during a media call Thursday morning. "There are a lot of moving parts, but we hope that the US and China will continue to have a strong recovery."
GM's North American business grossed $ 4.37 billion in the third quarter, up 44% year over year, although US sales declined 9.9% during the period. The company reported a pre-tax profit margin of 15% for the quarter. The result for its international operations was in the red with a pre-tax profit of 10 million US dollars.
A General Motors Co. (GM) Chevrolet 2020 Silverado HD High Country Edition pickup truck sits on the assembly line during a unveiling ceremony at GM's plant in Flint, Michigan, United States on Tuesday, February 5, 2019.
Jeff Kowalsky | Bloomberg | Getty Images
John Stapleton, GM's interim CFO, said the automaker's US and China sales are "recovering faster than many people expected, and GM is enjoying robust customer demand for our new vehicles and services, particularly our pickups and SUVs." in original size. "
Barra said the automaker is working to increase production of its trucks. An announcement is expected "very soon", but declines to elaborate on it.
"We're always working to find every single truck we can possibly produce," she said. "I would just ask you to hold on. You will hear more about this shortly."
The annual surplus rose by 74% $ 4.05 billion compared to $ 2.35 billion in the third quarter of 2019.
GM repaid $ 5.2 billion of its revolving credit facilities in the third quarter and another $ 3.9 billion in October. The company expects to repay the remaining amount by the end of the year, "while maintaining a strong cash position." GM's automotive liquidity was above target, ending the third quarter at $ 37.8 billion.
Then-CFO Dhivya Suryadevara told investors in July that the automaker had expected the third quarter to be "slightly stronger" than the fourth.
Suryadevara, who unexpectedly left GM for digital payments company Stripe in August, said if the monthly revenue pace was $ 14 million in the second half, investors should expect pre-tax profits of $ 4-5 billion by the fourth quarter. In this scenario, GM expects free cash flow of $ 7 billion to $ 9 billion. Suryadevara declined to publish official guidance at the time, citing fluidity due to the coronavirus pandemic.
Cox Automotive estimated the US revenue pace at $ 15.3 million in the third quarter, which should allow GM to beat those forecasts.
GM reported adjusted pretax earnings of $ 3 billion, or $ 1.72 earnings per share, for the third quarter of 2019. Sales were $ 35.47 billion.
Both Ford Motor and Fiat Chrysler exceeded Wall Street's expectations for better-than-expected demand for trucks and SUVs in North America. These are segments of which GM also has significant market shares.