After a surprisingly good day-to-day business in the third quarter, the US car manufacturer General Motors (GM) is now aiming for a higher adjusted profit for the current year. This should be between $9.75 and $10.50 per share, as the company said on Tuesday in Detroit. Previously the plan was $8.25 to $10.
The bottom line, however, is that the already known billions in depreciation on the electric car plans will reduce net profit. But that could no longer scare investors: the shares jumped almost 15 percent in early New York trading.
Surprisingly, sales are almost stable – net profit collapses
In the third quarter, GM’s sales remained almost stable, contrary to expectations, at minus 0.3 percent to 48.6 billion dollars (around 41.7 billion euros). Earnings before interest, taxes and special items fell by 18 percent to just under $3.4 billion. However, GM performed more robustly than analysts expected, especially in the important home market of North America. Adjusted earnings per share were $2.80; experts had only expected $2.27.
Net profit attributable to shareholders fell to $1.3 billion, less than half of the previous year’s figure. GM boss Mary Barra (63) had already admitted last week that US President Donald Trump’s (79) brake on electric car funding would cost the company at least $1.6 billion.
GM is reducing electric car production capacity due to expected lower demand. Trump had allowed a tax break to expire and revoked the right of the US state of California, which is considered a pioneer in electric cars, to issue its own emissions regulations.