General Motors’ third quarter 2017 earnings saw decreases in most hard metrics. However, the automaker achieved its first profitable quarter in all business segments, including South America, since Q4 2014.
Other third quarter 2017 highlights also include:
- Income from continuing operations impacted by $2.3 billion non-cash charge related to deferred tax assets no longer realizable due to Opel/Vauxhall sale
- EPS-diluted of $0.08 and EPS diluted-adj. of $1.32, from continuing operations
- GM Financial posted record revenues of $3.2 billion
Revenue
Net revenue for Q3 2017 came in at $33.6 billion, down $5.3 billion year-over-year.
The decrease was driven primarily by decreased wholesale volumes in North America, resulting primarily from planned downtime and other actions to match supply with demand. It partially offset by improved mix and growth at GM Financial.
Net Income
Operating income was $1.9 billion, down $1.2 billion from the third quarter of 2016.
Income from continuing operations (which now excludes Opel, which recently GM sold) attributable to common shareholders was $0.1 billion, down $2.6 billion year-over-year. It was impacted unfavorably by a $2.3 billion non-cash charge related to the sale of Opel/Vauxhall and lower earnings in North America.
Earnings Before Interest And Tax (EBIT)
The company reported earnings before interest and tax (EBIT) adjusted of $2.5 billion and EBIT-adjusted margin of 7.5 percent for the third quarter of 2017.
The EBIT performance represents a decrease of $1.1 billion year-over-year, primarily as a result of planned lower wholesale volumes and actions to match supply with demand in North America, partially offset by improved performance in South America, GM Financial and International Operations. Year-to-date, EBIT-adjusted is at a strong $9.8 billion.
The EBIT-adjusted margin was a decrease of 0.8 percent year-over-year.
Earnings Per Share
Earnings per share from continuing operations were $0.08 per share, down $1.68 per share.
Cash Flow And Liquidity
In Q3 2017, net cash from automotive operating activities was $1.1 billion, down $5.0 billion from Q3 2016.
This is primarily due to unfavorable working capital and other timing related impacts as a result of lower North American production.
Return On Invested Capital (ROIC)
Return On Invested Capital (ROIC) was 27.6 percent in Q3 2017, down 430 bps year-over-year, but well above the company’s 2017 target of greater than 25 percent.
Global Vehicle Deliveries
GM recorded 2.2 million vehicles globally in the third quarter of 2017, up 0.1 million year-over-year, driven primarily by growth in China and a modest recovery of the market in South America.
Q3 global market share is up 20 bps year-over-year, driven by growing share in our key markets in China, North America and South America.
Regional Division Results
- GM North America Q3 2017 performance included an EBIT-adjusted of $2.1 billion compared to $3.6 billion in Q3 2016.
- GM Europe is no longer a region for which GM reports results, as GM has sold its European Opel-Vauxhall unit to PSA Group.
- GM International Operations Q3 2017 performance included an EBIT-adjusted of $0.3 billion compared to $0.2 billion in Q3 2016.
- GM South America Q3 2017 performance included an EBIT-adjusted margin of $0.1 billion compared to a negative $0.1 billion in Q3 2016.
- GM Financial Q3 2017 performance included revenues of $3.2 billion compared to $2.4 billion in Q3 2016.
Comments
Thanks for putting a nice gloss on the figures Alex, 2 other figures that aren’t mentioned are an overall net $3bln loss for Q3 and a 31% decline in net operating profit.
David – there is no “gloss”… just the facts. The only thing that you could consider to be “gloss” is in the “highlights” section… and even then you’re stretching.
What “$3 billion loss” are you referring to?
GM was profitable across all eight of the core GAAP and non-GAAP metrics… not a single one of the eight primary metrics was in the red.
The decline in operating income is clearly mentioned in the first sentence under the “net income” headline in the report above.
Europe sale drags GM to a Q3 loss
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Michael Wayland
Automotive News Europe
October 24, 2017 14:00 CET
DETROIT — Charges related to General Motors’ sale of its European operations dragged the company down to a $3 billion third-quarter net loss, while profits from its continuing operations also declined sharply due to cuts in vehicle production.
Alex – You’re right, some of the facts were there, just not all of the facts.
I think (?) he’s referring to the $3B write-down on the Opel sale.
Painful in the short run, healthier in the long run, I suspect.
Does anyone know by how much the sale of Opel, the reduction in volume/scale, will effect GM bottom line long term?
Loosing over one million units must have an impact on the cost of certain components that aren’t scorced locally.
This is a good question and the answer is currently unknown.
From a personal standpoint (not confirmed nor denied by GM), I think that whatever loss in scale economies GM will incur from selling Opel will be more than absorbed by decreasing the operating capital that was exclusively spent on running the division.
I’m not sure given the industry’s focus on scale best summed up with One Ford being a key lesson at business school. White space product like Regal, Cascada, Mokka, and Tour X need scale.
Also, Opel fed the rest of GM with platforms and vehicles that have been key especially in China. Not be beat a dead horse but as I’ve said this before had Opel received proper licencing fees the division would have been profitable.
Now the R&D/development/design costs will burden another location and Buick will need to become self supporting. I doubt GM will do this within China given the automatic rights SAIC would gain offer future non China only vehicles.
The trick here is GM is far from being with out scale. They retain scale but with out the dead wood that has been holding them back.
We all must remember GM went to Bankrupt hell with all the he scale in the world. The key is to manage the leverage of scale but also balance it with efficiency and return on investment.
What others forget here is GM also makes money via not even building cars today. Lyft value has more than doubled since GM bought in.
GM has also done deals like the transmissions where they do most of the work and Ford pays for half of the cost. GM gets full use at half the cost.
They are going to increase efficiency with more flexible platforms and lower cost.
They are going to be able to sell much of the technology they are developing not only to other stores companies but to other industries. GM has developed things like welding steel to aluminum that can be used in other Fields. This will increase with AI.
GM is becoming a well balanced company and that works well in today’s market.
I wish GM would not sale their technology to anybody! I wish they would keep this stuff all to themselves and patent it so no other manufactures can’t copy It!