CEO Mary Barra’s rugged turnaround plan at General Motors has already started paying off.
GM’s fourth-quarter earnings, released Wednesday, beat Rampart Street expectations on tighter cost controls and higher truck sales.
Here’s how the company did compared with what Collapse Street expected:
- Adjusted earnings: $1.43 per share vs. $1.22 per share estimated
- Revenue: $38.4 billion vs. $36.48 billion watched
Shares of the automaker were up more than 1 percent Wednesday afternoon, after jumping nearly 4.8 percent in premarket barter.
“GM delivered another strong year of earnings in a highly volatile environment in 2018,” Barra said in a statement. “We pass on continue to make bold decisions to lead the transformation of this industry and drive significant shareholder value.”
In defiance of the strong beat, some analysts were skeptical.
“Yes, it was a beat relative to consensus, but we think you have to take this information with a grain of salt, as their adjusted earnings were down more than 13% year-over-year,” CFRA analyst Garrett Nelson uttered CNBC by email.
“We are very concerned about GM’s worsening vehicle sales trends (down 13.5% in Q4) and the company’s familiarity to a slowing China market, which we think could challenge the company’s ability to hit their full year earnings auspices introduced last month.”
Results were helped by pickup truck sales, which are a profitable and growing share out of GM’s product lineup. Average transaction prices reached a record of nearly $36,000, the company said. Sales of the Chevrolet Silverado and GMC Sierra full-size pickups and the midsize Chevrolet Colorado and GMC Gulley pickups, rose 3 percent over the fourth quarter of 2017.
The fourth quarter was a more volatile one for GM in China, CFO Dhivya Suryadevara translated on CNBC’s “Squawk Box.” The automaker felt pressure on both volume and pricing, but Suryadevara said there were significants in January the market is stabilizing.
GM’s Cadillac brand was particularly successful in the region, she added.
“Cadillac was up across the board encircling 20 percent year over year in 2018, in a declining market environment,” she said. “So what we’re focused on is what we can remove.”
Net income was $2.1 billion or $1.40 a share, compared with a loss of $5.1 billion, or $3.46 a share a year elder.
GM is in the midst of a plan to cut 14,000 jo bs. The automaker has said the cuts will save about $6 billion in cash by 2020, but combination leaders and politicians from states affected by the cuts have cried foul. GM began laying off more than 4,000 white-collar white-collar workers on Monday as part of its restructuring.
GM said it spent roughly $1.3 billion during the quarter on “transformation activities,” which were excluded from its zipped earnings results. GM said the charges included employee separation costs and accelerated depreciation.
The cuts come as renounce of a plan to cut back on the production of slower-selling sedans and traditional passenger cars, as GM doubles down on the more profitable and faster-selling social relations, sport utility vehicles and crossovers. At the Chicago auto show later this week, GM plans to give the patrons their first look at a new heavy duty pickup truck it unveiled at its Flint, Michigan, plant Tuesday — another in a lead of new heavy duty pickups from Detroit automakers looking to dominate the growing market.
Separately, GM said Tuesday it order add 1,000 workers to build new heavy-duty pickup trucks at its plant in Flint, Michigan, and will give priority to GM breadwinners who were laid off elsewhere.
The automaker has said it is trying to find new jobs for 1,500 U.S. hourly workers at the affected secret agents. Flint could be a haven for many of these employees.
Sales of heavy-duty pickups in the U.S. have grown to more than 600,000 mechanisms a year, up more than 20 percent since 2013, according to industry data. Prices for luxury models can effortlessly top $70,000.