GM Shares Surge as Pricey Cadillacs Fuel Surprise Jump in Profit
(Bloomberg) -- General Motors Co. shares climbed after the automaker posted a surprise increase in profit on strong demand for higher-priced Cadillacs in China and SUVs in the U.S. The company also hinted that full-year earnings may be at the high end of the range that it has forecast.
- Adjusted profit unexpectedly rose to $1.87 a share when analysts anticipated a decline from a year earlier, as GM overcame a leveling-off in global auto sales.
- GM’s sales in the U.S. have been down slightly this year and dropped 15 percent in China in the quarter, so expectations for this report were low.
- The automaker also said that it expects profit for the year to hit the high end of its previous guidance, which was for between $5.80 and $6.20 a share. Earnings could even beat $6.20 a share depending on “macro factors,” spokesman Tom Henderson told reporters at the company’s headquarters in Detroit.
- Slower retail sales didn’t hurt GM’s performance. In the U.S., the automaker continues to sell more expensive models. New sport utility vehicles including the Chevrolet Traverse and Equinox have been selling well and commanding better prices.
- GM’s income from its China operations was a third-quarter record. While retail sales dipped, this was driven by the low-priced Baojun brand, while the company delivered more lucrative Cadillac models such as the new XT4 SUV.
- Shares climbed as much as 11 percent to $37.15 and were up 7 percent as of 8:09 a.m. Wednesday in New York trading.
- For more details on the results, click here.
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