GM's Operating Profit Hurt by China Results, U.S. Production Cuts

By Mike Colias

General Motors Co.'s operating profit declined in the first quarter, dragged down by weaker results in China and a planned cut in production of big sport-utility vehicles in the U.S.

GM said its operating profit for the January-through-March period totaled $2.3 billion, down 11% from a year earlier. Operating earnings per share were $1.41, surpassing Wall Street analysts' average estimate of $1.10 per share. Those results were lifted 31 cents by revaluations of GM's stake in ride-hailing firm Lyft Inc. and French auto maker PSA Group.

Net income more than doubled, to $2.16 billion, from a year earlier when GM recorded hefty restructuring charges in South Korea. Revenue fell 3%, to $34.9 billion.

GM executives said in January that the first quarter would be its weakest of the year, partly because of its plan to temporarily stop building big, high-margin SUVs at the company's factory in Arlington, Texas, to prepare the facility to make new versions. Production at the plant, which makes the Chevrolet Suburban, Cadillac Escalade and other SUVs, fell 27% during the quarter, according to an estimate from WardsAuto.com

The results show that GM's bottom line is increasingly reliant on its highly profitable pickup truck and large-SUV lines, especially as profits from its sizable operation in China ebb amid an industry wide slowdown in the Chinese auto market. GM's first-quarter income from China fell 37% from a year earlier, to $376 million.

Auto-industry sales in China dropped last year for the first time in more than two decades and sank another 11% in the first quarter, while GM's declined nearly 18%.

Write to Mike Colias at Mike.Colias@wsj.com

(END) Dow Jones Newswires

April 30, 2019 08:32 ET (12:32 GMT)

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