GM's 3Q earnings drop 15% General Motors made $1.7 billion in the third quarter, down 15% from a year earlier, as profit margins failed to keep pace with rising revenue.
After seeing profits in all four global regions in the second quarter, the automaker lost money in South America and in its long-troubled European region. Nearly all of GM’s profits came from North America, where a more competitive cost structure and a recovering U.S. sales environment led to a $2.2-billion operating profit. Overall, revenue grew 7.6% to $36.7 billion in sales from $34.1 billion a year earlier.
“We had revenue growth year over year; we have share growth year over year. … Customers are obviously seeing the value of the vehicles that we have in the market,” Chief Financial Officer Dan Ammann told reporters this morning. “We plan actions everywhere to improve our margins. … This is about improving the sustainable profitability of our business.”
The third-quarter profit, GM’s seventh-straight, slightly beat analysts’ expectations: They had predicted a $1.54-billion profit, according to estimates compiled by Thomson One Analytics. But investors beat down the stock this morning, as the automaker said it did not expect to reach its target this year of breaking even in Europe before restructuring charges “due to deteriorating economic conditions.”
The stock price fell 10% in early-morning trading, before recovering slightly from that low. Early this afternoon, the shares were trading at $22.83, or 8.8% below Tuesday’s close.
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