What Recall? America Powers GM to a Solid Third Quarter
General Motors (NYSE:GM) reported its quarterly results for the third quarter of the fiscal year on Thursday morning, and from a quick glance at the company’s finances, a casual observer wouldn’t be able to discern that the company has recalled over 30 million vehicles across 75 different campaigns (and counting). It was North America, where most of the recalls took place, that actually helped carry the company as other markets floundered.
GM reported net income attributable to common stockholders of $1.4 billion, or $0.81 per diluted share, while booking a net loss from special items that brought net income down by $0.3 billion, or $0.16 per diluted share. These expenses were primarily attributed to flood damage at the company’s Technical Center in Michigan, as well as “long-lived asset impairments” in Russia.
“Strong global sales and growing margins in North America and China helped GM deliver very solid third quarter results,” said CEO Mary Barra in the company’s press release. “Despite industry challenges in Russia and South America, our earnings were on plan as we continue to execute our customer-focused strategy.”
Net income attributable to common stockholders was $700 million, or $0.45 per diluted share, beating analyst expectations by two cents per share. Revenues of $39.3 billion beat last year’s third quarter haul by $300 million, though fell shy of analyst projections by $220 million.
GM’s executive vice president and chief financial officer Chuck Stevens affirmed that America’s strength was instrumental in the company’s results. “Strong performance in North America, where we achieved a 9.5% margin, anchored our overall results,” Stevens said. “We remain focused on flawlessly launching key vehicles globally in the coming months, while delivering a positive experience for our customers.”
South America broke even during the quarter, though Europe displayed a decline of $400 million on an EBIT-adjusted basis. China is also thought to have made a positive impact, but the company didn’t offer details on its sales in the region. GM ended the quarter with total automotive liquidity of $36.6 billion, it said.
Hoping to build on the third quarter’s success, GM highlighted some notable product releases that will be beneficial for the upcoming quarter, including the new Colorado and Canyon midsize trucks, and a new Cadillac ATS-L, Buick Envision, and Chevrolet Cruze in China.
Truck sales accounted for about half of North America’s higher sales, and the current models are more profitable than the ones they replaced, Stevens said. That was a driving force behind the company’s profit margin expansion, from 7.5% to 9.5%. He added that lower gasoline costs are helping boost truck sales.
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