Saturday, Oct 01, 2016
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Automotive

GM 3Q profit falls 14%

Stock rises as company beats Wall Street expectations

DETROIT — A turnaround in South America and a rosier outlook in Europe helped push General Motors shares up in premarket trading today, even though the company's third-quarter net profit fell 14 percent.

GM said it earned $1.48 billion from July through September, down from $1.73 billion a year earlier, as European pretax losses widened and North American profits fell.

But South America swung to a big profit and GM posted better-than-expected results internationally outside of China.

GM said the quarterly performance, while down from last year, is a sign that steps it has taken to fix some troubled business units are working. The company was profitable in four of five of units, with Europe the only exception.

The Detroit company earned 89 cents per share, compared with $1.03 per share a year ago. Revenue grew 2.5 percent to $37.6 billion.

Excluding one-time items, GM made 93 cents per share, easily beating Wall Street expectations of 60 cents.

That drove GM shares up $1.06 or 4.6 percent, to $24.34 in trading early today.

Chief Financial Officer Dan Ammann said the improved performance in South America and countries like South Korea and Australia show that moves to fix the business are working.

“We can make those improvements and deliver the results,” he said.

The company also predicted its fourth-quarter pretax earnings would be about the same as last year's $1.1 billion.

GM also said about 30 percent of its U.S. salaried retirees took lump-sum payments instead of monthly pension checks. It also expects to close a deal next month to shift liability for its salaried pension plan to an annuity managed by The Prudential Insurance Co. The actions will cut GM's pension liability by $29 billion, $3 billion more than the original estimate of $26 billion, the company said.

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