GM’s profit rises 72% in 3rd quarter

DETROIT: America’s love of big autos translated into blowout results Thursday (Friday in Manila) for General Motors, which also benefited from recovering sales in China following a big hit amid the coronavirus pandemic.

The US auto giant, which recently launched new sport utility vehicles to accompany its fleet of revamped pickup trucks, enjoyed lofty profit margins in North America, fueled by strong vehicle pricing and tight auto inventory.

Executives spoke of “pricing power” in the US, partly thanks to the approximately two-month closure of two US auto plants this spring due to Covid-19. Production resumed in May under strict safety protocols.

“You really have this demand out there that we haven’t seen in a long time, especially for full-sized pickups,” chief executive Mary Barra said on CNBC. “We just keep seeing demand for trucks continuing to grow.”

Barra said in an earlier briefing with reporters that she was confident that GM would be able to maintain auto production despite rising Covid-19 cases in the US. “When the protocols are followed, we don’t have facility spread (of Covid-19),” she said, adding that the company has brought on temporary workers at times in recent months.

GM scored a 72 percent increase in third-quarter profit to $4 billion from the year-ago period. That translated into earnings of $2.78 per share, more than twice the expected level. Revenues of $35.5 billion were roughly flat compared with last year’s level.

The company announced it expects to reinstate a shareholder dividend in mid-2021, after the automaker suspended the payout in the spring at the height of Covid-19 shutdowns.

Profit margins were “so great” during the reporting period that they could prompt analysts to boost long-term forecasts for the auto giant, said a note from JPMorgan Chase. The better-than-expected results showed GM’s ability to “manage the business through a global economy under severe stress,” the company said.

But Acting Chief Financial Officer John Stapleton cautioned that the company does not expect fourth-quarter profits to be quite as strong, noting that the third quarter has traditionally seen higher sales.