Shares of General Motors grew after the company in the third quarter beat earnings per share forecast by posting a faster-than-expected recovery in the U.S. and China sales.
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General Motors (GM) shares, down 3.7 percent from the beginning of the year, increased 5.39 percent in trading on Thursday after the company announced its results for the third quarter ended September 30.
GM posted a 65 percent increase to $2.83 in earnings per share that came above analysts’ expectations of $1.38 for the same. Quarterly profit rose by 74 percent to $4.05 billion from $2.35 billion in the third quarter of 2019.
Total third-quarter revenue of $35.48 billion slightly missed analyst expectations of $35.51 billion, but that’s solid growth after revenue dropped 53 percent during the coronavirus pandemic in the second quarter amid factory closures.
John Stapleton, Interim Chief Financial Officer of General Motor, said the good quarterly results of the business were achieved thanks to a faster-than-expected sales recovery in two main markets of the U.S. and China, along with continuing cost reduction initiatives.
Overall, in the third quarter, GM’s revenue dropped 10 percent, but month-on-month performance improved, and sales of the most profitable products stayed high during the quarter. The operating profit margin of the carmaker in North America was a solid 15%.
Sales in China, where at the beginning of the year the COVID-19 pandemic peaked, grew by almost 12 percent compared to the third quarter of 2019. Foreign sales fell 4% with the sale of 1.793 million units.
In the third quarter, the automaker paid $5.2 billion in revolving credit facilities and another $3.9 billion in October. The company said it plans to repay the balance “while preserving a healthy cash balance” by the end of the year.
At the end of the third quarter, GM’s automotive business liquidity surpassed its target goal with available funds of $37.8 billion.