General Motors posted Q1 profits today. You might be confused about the results if you saw a sampling of the headlines for stories about the earnings report.
Was this report positive or negative? Some of these headlines imply that the General Motors’ earning report indicated stellar performance – “best North American first quarter,” “profit surge,” “push GMs profit eight times above year ago.” Others signal alarm: “profit disappoints,” “comeback hits a speedbump,” “tough earnings miss.” Only one – “General Motors 1Q profit rises 8 times above a year ago, but company misses analyst estimates” – provides the good and the bad news in the report.
Analysts had expected GM to earn $0.96 a share, but actually posted profit of $2.18 billion, or $0.56 per share. Consequently, stocks have been falling since the earnings report was released. As of this moment, they are down 3.77%.
Sales of trucks and SUVs are up in North America, in part because of lower gas prices. In the North American market, GM posted a record profit of $218 billion. Sales in China are also strong. In other parts of the world, GM experienced losses due to reduced demand and currency exchange rates. For example, in Q1, they took a $428 million charge related to exiting the Russian market, a decision made because of the economic and political uncertainty in the region. Sales in South America and Europe were down, and this was exacerbated by exchange rates unfavorable to GM.
Additionally, GM set aside an additional $150 million for the ignition switch compensation fund and started an ambitious stock buyback program to deter a group of investors from initiating a proxy fight.
As noted by the Wall Street Journal, most losses were caused by factors outside of GM’s control. Still, that is not reassuring to the investors who are selling GM stock today.
Read the original articles at the following links:
- GM Profit Disappoints on South America Weakness
- GM earns $945M on best North American first quarter since 2009 [from Detroit Free Press, GM’s home newspaper]
- GM Comeback Hits a Speedbump
- Arlington-made SUVs fuel profit surge at General Motors [from the Fort Worth Star-Telegram; Arlington, TX is in the DFW metro area.]
- GM Shares Sink as Currencies, Costs Drag Q1 Earnings
- GM Profit Rises, Aided by North America
- A Tough Earnings Miss for General Motors Company
- Truck, SUV profits push GM’s profit eight times above year ago
- General Motors 1Q profit rises 8 times above a year ago, but company misses analyst estimates
- This Car is Keeping GM Afloat
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