GM International Operations Posts $300 Million Earnings In Third Quarter 2016
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For the third quarter 2016, General Motors reported earnings consisting of a net income of $2.8 billion, earnings per share (EPS) diluted of $1.76, and earnings before interest and tax adjusted (EBIT-adjusted) of $3.5 billion on net revenue of $42.8 billion. During that time frame, the automaker’s International Operations division (GMIO) — which consists of operations across Asia, Australia, and Africa — contributed $300 million EBIT-adjusted.
The results compare to $3.5 billion EBIT-adjusted for GM North America and a negative $100 million EBIT-adjusted for GM Europe. Here’s a closer look at GMIO’s performance during the quarter.
GM International Operations Q3 2016 At-A-Glance
GMIO divisional performance for the quarter was as follows:
- Net revenue: $3 billion
- EBIT-adjusted margin from consolidated operations (1): negative 8.8 percent
- Total automotive China joint venture NI/Rev (2): 8.7 percent
- Sales volume (3): 136,000 units
- GMIO market share: 9.3 percent
Legend:
- Excludes equity income and non-controlling interest adjustments
- Revenue not consolidated in GM results, pro-rata share of earnings reported as equity income
- Excludes China joint ventures
| Metric / Quarter | Q3 2015 | Q4 2015 | Q1 2016 | Q2 2016 | Q3 2016 |
|---|---|---|---|---|---|
| Net Revenue | $3.0 Billion | $3.4 Billion | $2.7 Billion | $2.8 Billion | $3.0 Billion |
| EBIT-adjusted margin | -8.0% | -5.5% | -6.3% | -11.7% | -8.8% |
| Wholesales | 146,000 | 157,000 | 130,000 | 140,000 | 136,000 |
| GMIO Share | 10.0% | 10.7% | 9.8% | 9.2% | 9.3% |
GM International Operations Q3 2016 EBIT-Adjusted Notes Of Interest
The $300 million EBIT-adjusted represents a $100 million improvement over the $200 million EBIT posted in Q2 2016.
Following are highlights and notes of interest associated with GMIO’s Q3 2016 EBIT-adjusted performance. All figures vs. Q3 2015, unless otherwise specified:
- China equity income is flat Y-O-Y at $0.5 billion:
- Retail sales are up 134,000 units due to a strong market and the strength of the Baojun, Buick and Cadillac brands.
- SUVs and luxury vehicles continue to be strong, offset by weakness in demand for small passenger and mini-commercial vehicles.
- GM expects significant carryover pricing pressure of approximately 5% for the year, partially offset by improved mix due to the launch of the Cadillac CT6 and XT5 and Baojun 560 as well as the continued success of the Buick Envision. These pricing pressures will continue to put pressure on margins.
- Consolidated international operations results were flat yera-over-year:
- Macro-economic difficulties in GM’s Middle East Operations continue as a result of low global oil prices
- Wholesales volumes were flat year-over-year
- Economic conditions in GM’s Consolidated International Operations are expected to remain difficult
GM International Operations Q3 2016 Key Performance Indicators
Following are drivers that contributed to GMIO’s Q3 2016 EBIT-adjusted performance. All figures vs. Q3 2015, unless otherwise specified:
- Mix – unfavorable due to selling fewer full-size trucks and SUVs in the Middle East
- Cost – favorable cost due primarily to material and freight performance as well as continued focus on cost management actions
- Other – favorable FX due to the Australian Dollar and Korean Won
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And this is part of why they need to go global. More profits and increase spreading of cost over more markets is the way forward.