General Motors Co. reported third-quarter profit that beat estimates as recall expenses ebbed and North American customers flocked to pickups and sport-utility vehicles.
Adjusted earnings per share rose to 97 cents, topping the average analyst estimate for 95 cents. A year ago, the company earned 96 cents on that basis, the company said in a statement. GM has exceeded analysts’ estimates six of the last nine quarters.
“Overall, GM results tracked better than expected,” Ryan Brinkman, a JPMorgan Chase & Co. analyst, wrote in a report. “Some investors were concerned GM could post significantly worse-than-expected results in Europe and South America.”
GM shares slid 38 cents, or 1.21 percent, to close at $30.93 on Thursday. The shares fell 23 percent this year through Wednesday as the S&P 500 Index rose 4.3 percent. GM’s recall expenses are “substantially behind us,” Chief Financial Officer Chuck Stevens said.
The largest U.S. automaker said operating profit in North America rose 12 percent to $2.45 billion. GM sales of profitable trucks have risen 5.9 percent so far this year in the U.S., including a 53 percent rise in the luxury Cadillac Escalade SUV and a 5.9 percent gain in Chevy Silverado pickup deliveries, according to Autodata.
Mary T. Barra, GM chief executive officer since mid-January, has weathered Congressional hearings, public outcry and a blistering internal investigation that prompted her to fire 15 employees after she disclosed vehicle defects in February that have since been linked to 29 deaths.
GM has said it may need to pay as much as $600 million for death and injury claims and spent $2.5 billion on recalls in the first half of this year.
While North America improved, other regions did worse. Losses in Europe widened 63 percent $387 million from $238 million a year earlier as measured by adjusted earnings before interest and taxes. GM had a small loss in South America, compared with a profit of almost $300 million in 2013. GM’s adjusted earnings from other international operations slid 20 percent to $259 million.
Future margin gains will be fueled by improvements in North America, China and Europe, Stevens told investors Oct. 1. South American and other international operations will lose money in the short term as GM works to fix those businesses, he said at the time.
Barra and her top executives three weeks ago promised a 10 percent profit margin by early next decade, fueled by margins in China that will remain in the 9 percent to 10 percent range, cutting the number of vehicle frames from 14 to 4 and leveraging new models. In the meantime, the automaker said it would guard its $38.8 billion in liquidity and return some of its cash to investors in the form of higher dividends.
GM’s average transaction price for models sold in the U.S. in the first half of October rose to $35,000, the highest in the industry.