WASHINGTON: General Motors Co yesterday said its adjusted net income more than doubled in the second quarter, driven by North American truck sales and continued strength in China.
Chief Financial Officer Chuck Stevens reaffirmed the firm’s forecast that full-year operating profit would improve from last year’s US$9.3 billion.
The carmaker expects to maintain strong profitability in China, despite slower-than-expected sales and growing price competition in the world’s largest vehicle market, he said.
The recent slowdown in China’s car sales prompted some analysts to say that GM would have to back away from its forecast of holding profit margins at 9-10 percent of sales.
GM said its profit margins in China improved to 10.2 percent from 10 percent a year ago.
“There are lots of levers we can pull” to cut costs and maintain margins, Stevens told a press briefing.
GM has committed to spending US$14 billion on new vehicles and facilities in China in the coming years. Spending on new models won’t slow, but GM will “monitor and continue to evaluate” when to add new capacity, Stevens said.
“Our long-term view on China hasn’t changed,” he said.
Within the next 10-15 years, China’s auto market will grow to 35 million vehicles a year, he said, from about 20 million currently.
Stripping out one-time charges, GM earned US$2.9 billion, or US$1.29 a share, in the second quarter, up from US$1.4 billion, or 58 cents a share, and well ahead of the US$1.08 a share forecast of analysts. Net income rose to US$1.1 billion, from US$200 million a year ago.
GM also exceeded one of the key financial targets it agreed to in March as part of a deal with a shareholder group that had challenged the company for hoarding cash.
Stevens said that in the past 12 months, the company’s return on investment capital was 23.4 percent, ahead of the 20 percent goal.
