GM's Profit More Than Doubles
July 21 2016 - 8:30AM
Dow Jones News
General Motors Co., bolstered by strong truck and SUV demand in
its core market, posted a 157% increase in net profit in the second
quarter compared with the same period a year ago, leading the
Detroit auto maker to raise its annual guidance even amid concerns
about financial impact of the U.K.'s decision to exit the European
Union.
GM Thursday said it posted net income attributable to common
shareholders of $2.9 billion, up from $1.1 billion in the same
period a year ago. The company said operating profit equaled $1.86
per share, soundly beating Wall Street expectations of $1.49 a
share.
Revenue rose 11% to $42.4 billion versus $38.2 billion one year
ago.
GM benefited from the ongoing shift in the U.S. from passenger
cars to trucks and SUVs, rising sales in China and improved
conditions in Western Europe. Its operating margins of 9.3%
globally and 12.1% in North America represent postbankruptcy
records, the company said, and come despite relatively flat sales
and a decline in market share in the U.S.
GM posted a roughly $100 million profit in European operations,
its first quarterly profit in the region since 2011. Its 9.5%
operating margin in China was slightly lower than the same period
in 2015, but the company's performance in the world's largest
market is stable.
The results lend credibility to Chief Executive Mary Barra's
strategy of slimming down the company to focus on profitability
over gaining market share. In the U.S., the company has been
backing away from lower-margin sales to rental-car companies and
has resisted adding production capacity to conserve costs.
GM, however, said uncertainty created by the U.K.'s referendum
to exit from the EU has negatively impacted the British pound and
that could hurt production and sales activities there. The impact
could cost GM up to $400 million and jeopardize the company's goal
of turning profitable in Europe this year.
GM raised its full-year outlook for earnings by a quarter per
share to a range of $5.50 to $6.00.
Write to Gautham Nagesh at gautham.nagesh@wsj.com
(END) Dow Jones Newswires
July 21, 2016 08:15 ET (12:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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