DETROIT — General Motors said second-quarter net income rose 1.6 per cent to $2.4 billion (all figures USD), as the next-generation Silverado pickup powered North American profit growth, and it expects better results in the back half of the year.
The biggest U.S. automaker's adjusted earnings before interest and taxes fell 5.6 per cent to $3 billion from the same period a year ago. Its margin of 8.4 per cent slipped 0.3 per centage points. Revenue of $36.1 billion fell 1.9 per cent.
GM's second-quarter performance was driven by the all-important North America market, where it earned $3 billion, up from $2.7 billion the same period a year ago. That producd a 10.7 per cent profit margin, thanks to sales of its new pickups and crossovers and the results of restructuring. Heavy-duty versions of the Silverado and GMC Sierra launched in June, the company said in a statement.
GM shares rose 2.2 per cent to $41.24 in morning trading in New York.
“You’re really starting to see the earnings potential of our truck franchise,” CFO Dhivya Suryadevara told reporters Thursday morning at GM’s headquarters.
She said the automaker was very happy with its pickup position, despite falling into third place behind Fiat Chrysler’s Ram.
“We had a deliberate strategy that our launch would be cadenced,” she said. “It was a strategy that was rolled out on purpose and it’s working.”
Suryadevara noted GM began by rolling out higher-margin crew cab versions of the Silverado, where share increased 3 per cent quarter-over-quarter. It will be helped in the second half of the year by the continued rollout of HD models, as well as diesel variants.
“It’s early innings,” she said.
The company realized savings of $1.1 billion thanks to restructuring actions in the first half of the year, including $700 million in the second half, Suryadevara said. That includes salaried layoffs and “unallocation” of manufacturing plants. She added the automaker was not likely to announce any new cost-saving actions.
GM said 1,700 of the 2,800 hourly workers affected by the unallocations have been placed in new jobs, and that positions are available for all affected employees at other facilities.
GM's adjusted earnings per share of $1.64, a key metric for financial analysts, far exceeded Wall Street estimates averaging $1.44.
The automaker reiterated full-year guidance of between $6.50-$7 earnings per share and between $4.5-billion-$6 billion adjusted automotive free cash flow. Through six months, the company has earned $3.04 per share.
Suryadevara said cash flow for the remainder of the year will be evenly distributed between the third and fourth quarters.
GM nearly broke even on its international business, with a loss of $48 million in the quarter, down from a profit of $143 million a year earlier. China income fell by more than half to $235 million. Its other international markets improved by about $200 million, thanks in part to restructuring actions in Korea and South America, she said.
GM lost $279 million on its Cruise autonomous vehicle unit as it continues to invest heavily in robocars. GM earlier this month announced it would indefinitely delay the rollout of commercial robotaxi service and will ramp up testing in San Francisco.
GM Financial made $536 million in the quarter on record revenue of $3.6 billion.