CEO Mary Barra’s tough turnaround plan at General Motors has already started paying off.
GM’s fourth-quarter earnings, released Wednesday, beat Wall Street expectations on tighter cost controls and higher truck sales.
Here’s how the company did compared with what Wall Street expected:
- Adjusted earnings: $1.43 per share vs. $1.22 per share estimated
- Revenue: $38.4 billion vs. $36.48 billion expected
Shares of the automaker were up 1.6 percent Wednesday morning.
“GM delivered another strong year of earnings in a highly volatile environment in 2018,” Barra said in a statement. “We will continue to make bold decisions to lead the transformation of this industry and drive significant shareholder value.”
Despite the strong beat, some analysts were skeptical.
“Yes, it was a beat relative to consensus, but we think you have to take this report with a grain of salt, as their adjusted earnings were down more than 13% year-over-year,” CFRA analyst Garrett Nelson told CNBC by email.
“We are very concerned about GM’s worsening vehicle sales trends (down 13.5% in Q4) and the company’s exposure to a slowing China market, which we think could challenge the company’s ability to hit their full year earnings guidance introduced last month.”
Results were helped by pickup truck sales, which are a profitable and growing share 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 Canyon 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 said on CNBC’s “Squawk Box.” The automaker felt pressure on both volume and pricing, but Suryadevara said there were signs in January the market is stabilizing.
GM’s Cadillac brand was particularly successful in the region, she added.
“Cadillac was up across the board about 20 percent year over year in 2018, in a declining market environment,” she said. “So what we’re focused on is what we can execute.”
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 earlier.
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 by 2020, but union leaders and politicians from states affected by the cuts have cried foul. GM began laying off more than 4,000 white-collar workers on Monday as part of its restructuring.
The cuts come as part 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 trucks, sport utility vehicles and crossovers. At the Chicago auto show later this week, GM plans to give the public their first look at a new heavy duty pickup truck it unveiled at its Flint, Michigan, plant Tuesday — another in a string of new heavy duty pickups from Detroit automakers looking to dominate the growing market.
Separately, GM said Tuesday it will add 1,000 workers to build new heavy-duty pickup trucks at its plant in Flint, Michigan, and will give priority to GM workers 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 plants. 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 vehicles a year, up more than 20 percent since 2013, according to industry data. Prices for luxury models can easily top $70,000.