General Motors announced third quarter earnings per share well ahead of market expectations after adjusting for a $2.3bn non-cash charge relating to the sale of its loss-making Opel division in March.
But the Detroit automaker also reported production down 26 per cent for the third quarter, reflecting factory shutdowns due to model changeover but also softer demand in the US market which could have its weakest year since the 2008-09 recession. Chief financial officer Chuck Stevens predicted overall US light vehicle sales of over 17m this year and next, compared with 17.55 last year.
The Detroit automaker on Tuesday reported adjusted earnings per share of $1.32 for the quarter ended September 30, well above the market consensus of $1.13. GM said income from continuing operations was hit by a $2.3bn charge related to deferred tax assets that are no longer realisable due to the sale of Opel to Peugeot owner PSA earlier this year.
Net income after adjusting for the charge fell 31 per cent year on year to $2.5bn reflecting weakness in the North American market. On an unadjusted basis net income fell 96 per cent to $100m over the year earlier period.
General Motors’ share price has risen nearly 30 per cent so far this year, shrugging off concerns over demand for traditional autos. US new vehicle sales this year are expected to weaken despite a late boost from replacing cars destroyed or damaged by hurricanes. “The investor buzz around GM of late has been around the long-term ‘robo-taxi’ business opportunity,” Brian Johnson, auto analyst at Barclays, wrote in a note ahead of the earnings release.
The Detroit automaker has unleashed a barrage of well-timed announcements aimed at diverting attention from the slowdown in the traditional automotive industry and portraying itself as a leader in new technologies from electric vehicles to self-driving cars. As GM’s shares have climbed steadily, Ford’s shares are almost unchanged year to date, though they rose nearly 10 per cent since the appointment of a new chief executive, Jim Hackett, in May.
General Motors announced earlier this month that it is acquiring Strobe, a developer of the LIDAR technology used in autonomous cars, while GM also announced it will be the first to test self driving cars on the streets of Manhattan.
GM also announced earlier this month that it will introduce 20 new electric vehicles by 2023 including two new all electric vehicles in the next 18 months, at a time when Detroit rival Ford is seen as lagging behind on green vehicles.