DETROIT – General Motors’ first quarter profit more than doubled as all of its business units posted improved numbers including record pretax earnings in North America.
The Detroit automaker earned $1.95 billion, or $1.24 per share, even after a $500 million cash investment in ride-sharing company Lyft.
After paying $60 million to settle stockholder lawsuits over an ignition switch debacle, GM earned $1.26 per share. That soundly beat Wall Street forecasts. Analysts polled by FactSet expected $1 per share.
The company also paid $300 million in restructuring costs, mainly for union worker early retirement buyouts in the U.S.
GM nearly broke even in Europe for the quarter, made strong profits in China and narrowed its losses in challenging South America en route to record pretax profits of $2.7 billion for a first-quarter.
Investors greeted the news favourably, with the stock briefly rising above GM’s 2010 initial public offering price of $33 for the first time since Jan. 5. After rising as high as $33.41 early in Thursday’s session, GM shares slipped back to $32.68, up 49 cents, or 1.5 per cent, in afternoon trading.
Despite record earnings last year, dividends and plans to buy back $9 billion worth of stock, GM’s shares have remained in a one-year range of $24.62 to $37.45.
Chief Financial Officer Chuck Stevens said there’s a lot of “negative sentiment” on the auto industry from investors. He pledged to continue to post strong numbers and investing in future technologies such as ride-sharing and autonomous vehicles. “The share price will reflect that over time,” he said.
Stevens reiterated guidance of record pretax earnings for the year, beating 2015’s mark of $10.8 billion.
The first-quarter profits came even though global sales fell 2.5 per cent to 2.4 million vehicles. Stevens attributed the decline to lower sales in South America and a U.S. strategy to cut low-profit sales to rental car companies. But he said average prices per vehicle in North America improved, which he attributed to trucks and new products such as the Chevrolet Malibu and Camaro.
“Obviously full-size pickups SUVs and crossovers are still strong,” he said. “We’re very confident we’re going to have another 10 plus per cent (pretax profit) margin year in North America.”
North American pretax profits set a first-quarter record of $2.3 billion. The company lost $6 million in Europe compared with a $239 million loss a year ago. It had predicted break-even European numbers this year on stronger sales and prices for redesigned vehicles.
In troubled South America, GM narrowed its loss by $147 million to $67 million for the quarter. International operations profits including China rose by $8 million to $379 million. Profits at GM’s financial arm were up $11 million to $225 million.
Revenue for the quarter was $37.3 billion, up 4.4 per cent, beating estimates of $34.9 billion.
The story corrects adjusted earnings per share to $1.26 instead of $1.24.