GM 2Q profit beats estimates; N. America grows
DETROIT – General Motors' second-quarter profit topped expectations as a solid performance in North America offset declining profit in some international markets and more losses in Europe.
GM's net income excluding items amounted to 84 cents per share in the three months ended June 30. That was 9 cents better than analysts surveyed by FactSet had expected.
Overall, net income fell 16 percent in the quarter as GM faced tougher competition in Asia-Pacific countries outside of China. The company's finance chief said Thursday that Japanese rivals used a weaker yen to lower prices.
GM earned $1.26 billion from April through June, or 75 cents per share. That compares with $1.5 billion, or 90 cents per share, a year ago.
GM earned $1.98 billion before taxes in North America, up 4 percent over a year ago as small businesses bought more pickup trucks in the U.S. Profit in China also rose, GM said.
The company narrowed its European loss by $284 million to $110 million as cost cuts kicked in and new products such as the Opel Mokka small crossover SUV and Adam subcompact car sold well, said Chief Financial Officer Dan Ammann.
That helped to counter falling pretax profits in international operations. Competition from Japanese automakers forced GM to lower prices in Australia and Southeast Asian countries, the company said.
Ammann told reporters Thursday that Japanese automakers were using the weak yen to cut prices in Southeast Asia and Australia. The yen has been falling against other currencies, making goods made in Japan less expensive when sold in other countries, including the U.S.
"We don't see that abating in the immediate term," Ammann said, adding that the company has new products and is taking other unspecified actions to boost international profits.
Ammann said GM would build on its performance in Europe during the second half, but wouldn't say if the loss would be cut further.
"The things that we control we feel very good about," Ammann said of Europe. "Obviously what we don't control is the European macro environment. That remains very challenging, but we're making good progress despite that."
In North America, Ammann said he expected improved performance in the second half as GM gets the full benefit of rolling out its redesigned full-size pickup trucks, the Chevy Corvette sports car, an all-new Cadillac CTS and other new models.
"That's going to give us a good tail wind into the second half," he said.
Overall, GM's revenue rose 4 percent to just over $39 billion, beating Wall Street's estimate of $37.7 billion.
Worldwide sales rose 4 percent to 2.49 million vehicles.