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GM profit drops on weakness in Europe, South America
[NEW YORK] General Motors on Thursday reported lower third-quarter earnings on weakness in some international markets, but showed signs of emerging from a costly ignition-recall scandal.
Earnings at GM, the biggest US automaker, fell 14.3 per cent from the year-ago period to US$1.47 billion as the company reported operating losses in both Europe and South America.
But GM reported higher operating earnings in North America, where sales of the automaker's recently launched sports utility vehicles have soared amid lower gasoline prices.
GM also announced no fresh financial hit from recalls announced in the wake of the faulty ignition scandal. Charges totalling US$2.5 billion to cover recalls weighed on earnings in the prior two quarters.
"Strong global sales and growing margins in North America and China helped GM deliver very solid third-quarter results," said GM chief executive Mary Barra.
"Despite industry challenges in Russia and South America, our earnings were on plan as we continue to execute our customer-focused strategy."
Operating earnings rose 12.1 per cent in North America to US$2.45 billion. Vehicle deliveries jumped 12.8 per cent amid brisk industry-wide sales in the giant US market.
Barra cited particularly strong sales in pickup trucks and SUVs following recent launches of the GMC Canyon and other vehicles that are expected to generate further gains in the fourth quarter as the products become more widely available.
GM's also reported positive earnings and strong sales in its international unit that includes China. Deliveries in the booming Chinese market soared 14.1 per cent higher from the year-ago period to 850,000.
But GM's loss deepened in Europe, where consumer spending remains meager amid lackluster economic growth. The auto giant also took a US$200 million asset-impairment charge in Russia as it trimmed staff and cut factory capacity to deal with reduced demand following the ruble's devaluation.
The South America division notched a US$32 million loss compared with a US$284 million gain in the year-ago period. Sales in Venezuela have fallen sharply due to a currency devaluation, while deliveries in Brazil have dropped in a weaker economy.
Still, the loss in South America was smaller than in the third quarter. chief financial officer Chuck Stevens said South America should see "continued improvement" in the fourth quarter.
GM expects "significant improvement" in 2015 in Europe, Mr Stevens added. The automaker has said its European segment will return to profitability in 2016.
In terms of the recall, Barra said GM has repaired more than 1.2 million vehicles affected by the ignition-switch problem.
She said the company was stepping up outreach to the remaining population of affected consumers now that GM has obtained all the necessary equipment to complete the repairs. GM recalled some 2.6 million cars in February to address the ignition-switch problem, which has caused at least 29 fatalities.
The automaker has recalled nearly 30 million vehicles in all in 2014, but most of the remaining recalls have been for safety problems other than the ignition-switch issue.
GM's results translated into earnings per share of 97 cents, excluding special charges. That was two cents above analyst expectations.
Revenues rose 0.6 per cent to US$39.26 billion, slightly below the US$39.52 billion projected by analysts.
GM shares dipped 0.5 per cent to US$31.17 in midday trade.