General Motors, the largest US automaker and the third biggest in the world, said on Thursday its adjusted net income had more than doubled during the second quarter, thanks to strong demand for trucks in North America and surprising strength in China.
Shares of the company soared around four percent after the announcement, with chief financial officer Chuck Stevens also restating the company’s goal to achieve an annual operating profit higher than 2014’s figure of $9.3 billion. He added the carmaker was forecasting a continued strong profitability in China, the world’s largest auto market, even though slowing deliveries and higher pricing competition could have painted a bleaker picture. The recent and rather unexpected weakness in Chinese vehicle sales had some analysts worrying the company would have to backtrack its previous pledge of keeping profit margins in China at 9 to 10 percent of sales – with GM actually having the margin slightly up at 10.2 percent instead of 10 percent during the same period last year. “There are lots of levers we can pull” to curb expenses and keep level the profit margins in China, the top executive commented during a conference call with media representatives.
Without one-time charges, GM earned $1.29 a share in the latest quarter, soaring from 58 cents a share during the second quarter last year. Profit was also up even as global sales were on a negative trend and worldwide revenue had a slide of 3.5 percent. Net income grew to $1.1 billion, or 67 cents a share, from $200 million, or 11 cents a share, a year ago, when it was heavily bogged down by the massive charges related to recall costs.