China and Truck Sales Drive Profit at GM That Beats Wall Street

General Motors Company reported record earnings for the quarter before charges as strong demand for its trucks across North America and increased profit margins within China overcame a drop in revenues.

Shares of GM were up 4.5% on the news in trading before the bell on Wednesday.

GM posted a per share profit of $1.50 for the quarter, which was up 55% compared to the same period one year ago and far head of the Wall Street estimate of $1.18 a share.

The robust quarter for GM contrasted with poor results from the other big manufacturers in the U.S., which have struggled with a slowdown in growth in China, as well as a drag on their revenues due to the strength of the U.S. dollar.

For GM, the key to its success was North America where inexpensive gasoline fueled an increased demand for larger pickups and SUVs, segments where the carmaker is dominant.

GM generated 72% of its revenue for the quarter in North America where its profit margins hit a new record at 11.8%.

In China, the GM share of its joint venture profits for the recently ended quarter dipped from $484 million last year to $463 million, but its profit margins were up from 9.6% to 9.9%, reflecting the sales of SUVs along with luxury vehicles.

Chuck Stevens the CFO at GM said the automaker is expecting to reach its goal in 2015 of generating profits margins of 10% in North America for the year, which is one year ahead of its current forecast.

However, overall, revenues at GM for the just ended quarter were down by 1.3% to just over $38.8 billion, which is largely due to the impact of the strong dollar.

General Motors said that revenues would have been higher by over $2.3 billion if the exchange rates were constant.

During the quarter, GM had costs of $1.5 billion related to its settlement of a Justice Department investigation of GM’s mishandled recall of a faulty ignition switch.

Including that charge, net income reached $1.36 billion equal to 84 cents per share compared to last year of $1.47 billion equal to 81 cents per share.

Receive News & Ratings Via Email - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings with our FREE daily email newsletter.