GM Posts Sharply Higher Profit
It expects second-half operating income to exceed the $5 billion reported in the first half as it relies on richer profits in China and the U.S. to offset weakness in certain emerging markets.
General Motors Co. on Thursday reported $1.1 billion in net income attributable to common stockholders in the second quarter, a sharp increase from $200 million in the same period a year ago as U.S. customers continued flocking to profitable SUVs and crossover vehicles.
It expects second-half operating income to exceed the $5 billion reported in the first half as it relies on richer profits in China and the U.S. to offset weakness in certain emerging markets.
The No. 1 U.S. auto maker in terms of sales beat analysts’ expectations despite losing market share in the U.S. car market and the threat of an economic slowdown in China, the auto maker’s largest market. GM reported second quarter adjusted earnings per share at of $1.29, solidly beating analysts’ forecast of $1.08.
Revenue dropped $1.4 billion to $38.2 billion. GM’s bottom line has seen a boost from customers responding to cheap gas to buy larger vehicles in the U.S. market and its ability to sell more luxury vehicles and SUVs in China, helping it offset a price war taking place there.
“The first two quarters of the year were strong as we fully capitalized on a robust North American industry and maintained our strength in China, despite challenging conditions in that market,” GM CEO Mary Barra said in a statement. “We said our goal was to improve our earnings and margins this year, and we are on-plan. Consistent with that, we believe our results in the second half of the year will be even better than the first half, and we’re confident we will meet our 2016 targets.”
GM said it recorded 10.2% equity net income margin in China, and North American operating margins were up to 10.5%, the highest since the company emerged from bankruptcy in 2009. GM expects a North American operating margin of 10% by 2016.
