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GM profit beat driven by strength in trucks, SUVs and China rebound
[DETROIT] General Motors reported a stronger-than-expected quarterly profit on Thursday, driven by renewed demand for trucks and SUVs in the United States and a rebound in China sales.
The company also said it would generate cash flow of US$7 billion to US$9 billion during the second half of the year, as sales in its two largest markets recovered more quickly than anticipated during a global pandemic.
In a statement, chief executive Mary Barra said the company was "well positioned to meet rising customer demand." GM's US sales in the third quarter fell 10 per cent due to the Covid-19 pandemic, but results improved each month. In China, GM's sales in the quarter rose 12 per cent, its first quarterly sales growth in two years.
The Detroit automaker reported net income of US$4 billion, or US$2.78 a share in the quarter, compared with US$2.35 billion, or US$1.60 a share, a year earlier.
Excluding one-time items, GM earned US$2.83 a share, above the US$1.38 a share expected by analysts, according to IBES data from Refinitiv.
The company's EBIT-adjusted margin in North America jumped 6.5 points to 14.9 per cent in the quarter, reflecting the strength of its high-margin pickups and SUVs.
GM repaid US$5.2 billion of its revolving credit facilities during the third quarter, and an additional US$3.9 billion in October.
The company expects to repay the balance by year-end while maintaining a strong cash balance. It ended the quarter with US$37.8 billion in liquidity.
GM had indicated in July it would generate enough cash to pay off a US$16 billion loan by the end of the year, but only if the US economy continued to recover after the presidential election and there were no further significant pandemic-related production shutdowns.