Ahead Of General Motors' Q3 Results

(RTTNews) - Automaker General Motors Company (GM) will publish its third-quarter results before the bell on Wednesday, October 21. Analysts, polled by Thomson Reuters, are estimating earnings of $1.19 per share on revenue of $38.78 billion. The company reported net income of $1.4 billion or $0.81 per share on revenue of $39.3 billion in the third quarter of 2014.

Among GM's largest markets, third-quarter sales rose in the United States, the U.K. and Canada. Opel/Vauxhall, Buick, Cadillac, GMC and Baojun all reported third-quarter sales growth of 5.4%, 3.8%, 1.5%, 6.7%, and 166.9%, respectively. Chevrolet had record crossover sales in the United States, up 24%, while Chevrolet U.S. truck sales increased 16%. Deliveries in South Korea were up 11% to record of nearly 43,000 units. Global sales were down 3%.

The company plans to strengthen its core business through global growth initiatives and an aggressive product launch cadence, while continuing to focus on driving cost efficiencies. As a result, the company expects to increase its earnings per share and generate significant shareholder value.

GM is preparing to launch even more new trucks and crossovers during the next several months, including the all-new Cadillac XT5, a redesigned Chevrolet Silverado and a diesel-powered Chevrolet Colorado for North America, and the Baojun 560 in China. Key car launches include the all-new Chevrolet Malibu and Cruze in North America and the Opel Astra in Europe.

Q2 Performance

In the previous quarter, the company reported an upsurge in profit, reflecting strong truck sales in North America and continued strength in China. Adjusted earnings per share for the quarter beat analysts' expectations, while revenues missed their estimates.

GM CEO Mary Barra said, "The first two quarters of the year were strong as we fully capitalized on a robust North American industry and maintained our strength in China, despite the challenging conditions in that market. We said our goal was to improve our earnings and margins this year, and we are on-plan."

Second-quarter net income attributable to common stockholders rose to $1.12 billion or $0.67 per share, up sharply from $278 million or $0.11 per share in the prior-year quarter.

The latest quarter's results include special charges of $0.62 per share, related to a previously-announced currency devaluation in Venezuela, asset impairments primarily for GM Thailand, and an adjustment to the estimated cost of the ignition switch compensation program.

Excluding items, adjusted earnings for the latest quarter were $1.29 per share, compared to $0.58 per share in the year-ago period.

On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $1.08 per share for the quarter. Analysts' estimates typically exclude certain special items.

However, total net sales and revenue declined 4% to $38.18 billion from $39.65 billion in the same quarter last year, due to foreign currency exchange impact. Analysts were looking for revenue of $40.62 billion.

Automotive revenues decreased 5% from last year to $36.67 billion, while GM Financial revenues grew 27% to $1.51 billion. GM's total global retail vehicle sales volume for the quarter declined 2% to 2.46 million from 2.51 million in the year-ago period, with decreases in South America, APMEA and Europe.

The company's global market share also edged down to 11.1% from 11.3% in the year-ago quarter, with declines in the U.S., Europe, North America and South America.

Recent Happenings

Most recently, General Motors announced a recall of 395 new 2015 model vehicles equipped with faulty airbag inflators manufactured by Takata Corp. The company also called back 3,300 pickup trucks and SUVs having ignition switch issues.

After certain testing at the company's Mexico facility, GM found the 2015 models of the Buick LaCrosse, Cadillac XTS and Chevrolet Camaro were faulty. The Malibu, Equinox and GMC Terrain were also found to be defective.

Last month, General Motors agreed to a $900 million settlement with the U.S. Justice Department for concealing an ignition switch defect that resulted in many deaths and forced the automaker to recall a large number of vehicles.

GM also said it will record a charge of $575 million in the third quarter.

Last week, General Motors said it sold 7.2 million vehicles globally in the first nine months of 2015. The company posted sales increases in four of its five largest markets, with record sales in China and strong retail sales gains in the United States. Total sales were down 1%, due primarily to the company's previously announced decisions to strategically reduce its presence in certain markets, as well as difficult market conditions in South America.

GM truck sales in North America were up 16% in the first nine months of 2015, driven by a 17% rise in Chevrolet truck deliveries in the United States. Chevrolet had record crossover sales in North America in the same period, up 17% year over year.

In China, crossovers like the Chevrolet Trax and Buick Envision represented more than 17% of sales by GM and its joint ventures in September, up from 6% a year ago. Cadillac had record sales in China with deliveries rising 12% to nearly 57,000 units.

In addition, the company noted that it expects to grow its business over the next five years through key initiatives including a $5 billion investment in an all-new Chevrolet growth market vehicle family; maintaining a strong market position in China by enhancing its presence in SUV and luxury segments; expanding Cadillac's vehicle portfolio into growing luxury segments; continuing the growth of GM Financial through the expansion of services globally, and expanding aftersales and OnStar revenue opportunities globally.

In the same timeframe, GM plans to introduce a large number of all-new or refreshed vehicles globally. In 2015, about 26% of GM's global sales volume has come from vehicles new or refreshed within the previous 18 months. This percentage is projected to be 39% in 2016, 40% in 2017, 31% in 2018, and reach 40% in 2019 and 2020.

GM is also accelerating its efforts to drive further cost efficiencies across the value chain, with a focus on enhancing overall value for its customers. The company said it expects to generate benefits of about $5.5 billion in purchasing, manufacturing and administration expense between 2015 and 2018, more than offsetting increased investments in brand development and technology.

August 4, General Motors said it plans to invest $877 million to build a new body shop for the assembly plant, locating it closer to the Flint Metal Center, which supplies sheet metal and other parts used in the Chevrolet and GMC full-size pickups produced in the assembly plant.