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GM Revenues Down, Beats on Crossover Sales

GM Revenues Down, Beats on Crossover Sales

General Motors (GM) reported on Thursday a almost 60-percent drop in net income amid planned downtime for pickup production and an aggressive restructuring effort in Republic of Korea. The Detroit automaker also announced that it was reducing its North American vehicle lineup to the Mustang and a Focus Active crossover in a bid to boost production of trucks and SUVs. Sales of crossover vehicles are up 23% across all GM brands. "Our Q1 results were on plan and we remain confident in the full year guidance we announced in January", said CFO Chuck Stevens.

Chief financial officer Chuck Stevens told CNBC that GM has seen no slowdown in China despite threats and counter threats between Beijing and Washington.

The EBIT-adjusted margin slipped 2.3 points to 7.2%.

Earlier this year, GM said its 2018 profits would be flat compared with 2017, but expected its all-new pickup trucks would boost margins starting in 2019.

Stevens said the automaker has "already indicated that we will make significantly lower investments" in sedans in North America.

The expenses will go for severance and other costs associated with the closure, GM said.

GM said raw material costs were $200 million higher and it expects those costs to continue rising, which it will offset with cost cutting measures.

"It is a more hard environment than it was three or four months ago", Stevens said when asked about rising commodity prices from potential steel and aluminum tariffs announced by the Trump administration.

However, net income tumbled to $1.05 billion, or 77 cents per share, from $2.61 billion, or $1.75 per share, a year ago, hurt by a $900 million charge to restructure its business in South Korea. Analysts had on average expected earnings per share of $1.24.

Revenues fell 3.1 percent to $36.1 billion. Analyst forecasts by Thompson Reuters were looking for $34.66 billion and $1.24 respectively.

GM's shares traded down about 2.8% in Thursday's premarket session to $37.15, in a 52-week range of $31.92 to $46.76.

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