DETROIT – General Motors’ third-quarter net income fell 53 per cent compared with a year ago, as one-time expenses masked a strong performance in North America and a narrowed loss in Europe.
The company earned $698 million in the quarter, or 45 cents per share. That compares with $1.48 billion, or 89 cents per share, a year ago. But without $900 million in one-time items, GM earned $1.7 billion, or 96 cents per share. That beat Wall Street’s expectations. Analysts polled by FactSet expected 94 cents per share.
Revenue rose 4 per cent to $39 billion, just short of Wall Street’s estimate of $39.2 billion.
Investors viewed the results favourably. GM shares rose 87 cents, or 2.4 per cent, to $36.93 in morning trading.
GM’s performance in North America was especially strong, with pretax earnings up 28 per cent to $2.2 billion on solid pickup truck sales and better pricing. GM rolled out updated versions of its Chevrolet Silverado and GMC Sierra pickups in the spring.
The company’s profit margin in North America — the percentage of revenue it gets to keep after expenses — was the highest in two years at 9.3 per cent. GM has a goal of 10 per cent pretax margins in the region.
“The new trucks are doing great in the marketplace,” Chief Financial Officer Dan Ammann said. “We’re commanding good pricing. We’re controlling costs.”
GM’s average sales price rose 1 per cent in the U.S. during the quarter to $34,566, according to Kelley Blue Book. Sales of the Silverado, its top-selling vehicle, were up 14 per cent over last year’s third quarter. Prices for the pickup rose by 2 per cent to an average of $36,487.
In Europe, GM cut its loss by more than half to $214 million. Revenue there rose year-over-year for the first time in two years. Ammann said the company cut $400 million in costs during the quarter, and updated versions of its Opel Mokka small crossover SUV, Adam subcompact and Insignia midsize car sold well.
GM’s International Operations, including Asia, saw pretax earnings fall 61 per cent to $299 million due to struggles in India, Australia and Southeast Asia. The unit would have lost more than $100 million without $400 million in earnings from China.
“We continue to have challenges in some markets,” Ammann said. Some are due to industrywide issues such as competitors lowering prices, but some are execution problems on GM’s part, he said.
South American profit rose 79 per cent to $284 million. The company’s financial unit saw a 20 per cent rise in pretax earnings to $239 million.
One-time items included $800 million to buy preferred stock from a health care trust for union retirees and a $48 million impairment charge in South Korea.