General Motors reported a 42% drop in profit for the second quarter, reflecting in part the sale of its European operations, but adjusted earnings beat analysts’ estimates.
The No. 1 U.S. automaker said Wednesday it made a profit of $1.7 billion, down from last year’s record $2.9 billion profit as U.S. industry sales hit their peak. With the European operations excluded, it earned a profit of $2.4 billion, or $1.89 per share, easily beating Wall Street’s $1.70 per share estimate.
GM incurred a $770-million loss from the sale of the European division and $600 million in special charges related to the decision to stop selling vehicles in India and to sell its operations in South Africa.
Revenue for the quarter was $37 billion, down from $37.4 billion a year earlier and below the $40.1 billion expected by analysts.
“Strong results in North America and China, solid improvement in South America and continued growth of GM Financial drove another strong quarter,” CFO Chuck Stevens said in a news release. “With an aggressive launch cadence still ahead this year, we are on track to meet our financial commitments for 2017.”
In the second quarter, GM delivered 725,000 total vehicles in the United States, driven by a 24% increase in retail crossover sales, while in China, deliveries of 852,000 vehicles set a second-quarter record.
But U.S. sales through the first half of the year were down 1.7% after seven years of consecutive gains, and sales in China, GM’s largest market, were down 2.5%.
Analysts said investors are concerned about U.S. industry sales and GM’s inventory levels, which have increased from the prior year as sales have declined. But GM said it had intentionally built up its inventory over the first half of the year so it has enough vehicles on hand as it launches an all-new Chevrolet Silverado pickup along with a new Chevrolet Equinox.
“We would expect to bring inventory down by the end of the year to be consistent with 2016 results of roughly a 70-day supply,” Stevens told the Detroit Free Press.