GM Shares Move Up On Better Than Expected Q1 Performance
Lower losses in Europe and a new pickup truck improve outlook
GM earned $865 million, or 58 cents per share, compared with $1 billion, or 60 cents per share, in the January-March period a year ago. Excluding one-time items, GM earned 67 cents per share in the latest quarter. Analysts were expecting 54 cents, according to FactSet.
Revenue fell 2.3 percent, to $36.9 billion from $37.8 billion. But the top-line number still surpassed Wall Street expectations of $36.6 billion. GM shares rose 4.3 percent to $31.48 in premarket trading.
While success in North America and China are helping to off-set the automaker's sagging European fortunes, the one trouble spot for GM in the U.S. seems to be an increase on discounting in some high volume model categories such as the outgoing pickup trucks and Chevy Malibu sedan.
GM also incurred higher costs preparing plants for new vehicle launches, especially the redesigned Chevrolet Silverado and GMC Sierra full-size pickup trucks, as well as lower shipments because those plants were down. But second and third quarter results should be markedly improved as the pickup truck market is surging, and GM will have brand new offerings.
A loss of $175 million in Europe was smaller than the $469 million loss that Wall Street estimated, which accounted for a 5% gain in GM shares in early trading.
Worldwide sales rose 3.6 percent to more than 2.3 million cars and trucks. GM saw record first-quarter sales of 816,373 vehicles in China, up 10 percent from the same quarter a year ago. Among the hot sellers was the Cadillac XTS full-size sedan, which went on sale in China in February. Chinese buyers snapped up more than 2,000 XTS sedans in March alone, despite a steep starting price of $56,000.
The Cadillac XTS and smaller ATS also gave GM a boost in the U.S., where first-quarter sales rose 9 percent to 664,963. GM outpaced the industry's gain of 6 percent. U.S. Cadillac sales jumped 38 percent while Buick sales rose 27.5 percent, thanks to the new Verano small car and Encore small utility.
The U.S. Treasury is unwinding its ownership stake in GM that it took in the company's 2009 bankruptcy. The government could be out of GM all together by the end of the year or early 2014 at the latest.
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