General Motors made more money than expected in the second quarter and did it the old-fashioned way: selling more vehicles people would pay more to have. And it did it worldwide.
GM posted a second-quarter profit of $2.5 billion, up 89% from the quarter a year ago. Earnings per share were $1.54, compared with 85 cents. Analysts had forecast about $1.20 per share.
Revenue rose 19% to $39.4 billion, and unit sales of 2.3 million were up 7%. «GM sales outpaced the industry sales growth in the second quarter (11.2% vs. 6.5%), indicating the underlying strength of their product lineup,» said Jesse Toprak, vice president of industry trends and insights at TrueCar.com. «Lower incentives spending per unit made up for the slight decline in average transaction prices.»
According to TrueCar, GM had a 1.6% decline in transaction prices in the quarter vs. last year that was more than offset by a 16.5% drop in sales incentives.
The quarterly profit was GM’s sixth in a row and, notably, the company made money in all four of its global regions — even in Europe, where it is trying to restructure its troubled Opel unit.
Despite the report, GM shares fell $1.18, or 4.3%, to close at $25.99, as the overall market dropped about the same on concerns about the economy.
The U.S. government still owns about a fourth of the company as a result of the 2009 bailout and had said this spring it would wait until at least this month to begin unloading the stake. But it needs a share price of more than $50 to break even on the $49.5 billion bailout.
GM Chief Financial Officer Dan Ammann, speaking to reporters Thursday, said, «It’s a solid quarter … profitable in every region of the world — that’s an important first for us.»
The company said second-half earnings «will be modestly lower» based on seasonal factors. Ammann also noted the worries about the overall economy, but expressed confidence. «There’s an increased amount of uncertainty out there. … What we’ve done successfully is configure the business with a low break-even point and a strong balance sheet so that we can handle whatever scenario comes along.»
Source: usatoday.com