DETROIT: General Motors Co reported a better-than-expected quarterly net profit, helped by cost cuts, and promised to cut production in the second half to curtail its burgeoning US inventory of unsold vehicles.
The No 1 US automaker also maintained its earnings outlook for 2017 despite falling revenue. Shares were up 0.8 per cent at $36.12.
GM Chief Financial Officer Chuck Stevens cautioned in a call with analysts that production of its profitable large pick-up trucks in North America could fall by 10 per cent in 2018 as a new generation of trucks is launched. However, Stevens said GM could maintain 10 per cent pre-tax profit margins in North America if overall sales remain close to 17 million vehicles a year.
The results excluded nearly $800 million in losses from the company’s European operations, which are being sold to France’s PSA Group.
GM reported second-quarter net income of $2.4 billion or $1.60 per share, down from $2.8 billion or $1.74 per share a year earlier.
Excluding one-time charges, earnings per share of $1.89 beat analyst estimates of $1.69.
Revenue for the quarter was $37 billion, down from $37.4 billion a year earlier and below the $40.1 billion expected by analysts.
Wall Street is concerned the US auto industry is entering a downturn after several years of strong sales. Automakers have reported declining sales for the past four months.
GM sold 30,000 fewer cars in the quarter, with much of the decline driven by lower sales to rental car agencies. At the end of June, it had a 105-day supply of cars, above the 90-day supply it told investors to expect back in April. — Reuters
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