General Motors‘ efforts to retool its factories for hot-selling trucks caused first-quarter earnings and revenue to drop from last year, but strong crossover sales helped the company beat analysts’ expectations.
In the U.S. and China, sales of new crossovers doubled over the same quarter in 2017, the company said Thursday.
Here’s how the company did compared with what Wall Street expected:
- Earnings: $1.43 per share, adjusted vs. $1.24 per share forecast by Thomson Reuters
- Revenue: $36.1 billion vs. $34.66 billion forecast by Thomson Reuters
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.
On an adjusted basis, the company earned $1.43 a share, which was better than $1.24 per share analysts were expecting.
GM’s stock was down less than 1 percent in Thursday’s premarket.
GM reached a deal with a Korean labor union on Thursday that will allow the automaker to remain in the country and save the company $400 million to $500 million per year, CFO Chuck Stevens said on a call with reporters.
The automaker also reached a preliminary deal with a state-owned Korean bank to secure $750 million in funding.
GM said first-quarter revenue fell 3.1 percent to $36.1 billion.
GM delivered 715,794 vehicles in the U.S. during the first quarter, up 4 percent and ahead of an estimated industry increase of about 2 percent.
“Results this quarter were in line with our expectations with planned, lower production in North America related to the transition to our all-new Chevrolet Silverado and GMC Sierra,” Chairman and CEO Mary Barra said in a statement. “We are on plan to deliver another strong year in 2018.”
GM’s pretax profits in North America were $2.2 billion, down from $3.5 billion last year. Stevens said the major driver was the amount of factory downtime the automaker needed to retool factories for truck manufacturing.
Stevens said he expects strong performance in the second quarter, but the continued switch to trucks will likely hurt second half results.
Like its rival Ford, GM has been shifting its portfolio away from passenger cars and toward trucks, SUVs and crossovers, which combine elements of cars and SUVs.
The largest U.S. automaker has been cutting shifts at some factories that make passenger cars, such as its plant in Lordstown, Ohio, which makes the compact Chevrolet Cruze sedan. At the same time, it has added a shift at its Spring Hill assembly plant in Tennessee to meet demand for the GMC Acadia and Cadillac XT5 crossovers.
SUVs and trucks went from less than 50 percent of the U.S. market in 2008 to 65 percent e at the end of 2017 and are expected to further grow in popularity, according to LMC Automotive.
Some changes among executive ranks are happening as well. The president of GM’s luxury brand Cadillac Johan de Nysschen was abruptly replaced in mid-April by GM Canada executive Steve Carlisle. Cadillac has lagged other brands in the SUV and crossover segments, which has been a source of frustration for some dealers. Cadillac plans to release its third SUV, the XT4, in late 2018.
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