Does GM’s top brass know something the rest of us don’t?
The Detroit News reports that General Motors is offering a severance program to salaried workers with 12 or more years at the company. The buyout is voluntary at this point, and it’s available to 18,000 workers under the GM umbrella – more than a third of the automaker’s North American workforce. According to the report, GM’s goal with the program is cost savings but specific details are not available. At this time there’s no indication that layoffs are planned, but the company will reportedly reevaluate the situation after the buyout program concludes on November 19.
This is a rather surprising move considering GM also posted exceptionally strong third-quarter profits today. In a press release (available at the bottom of the page), GM listed revenue of $35.8 billion, which is a 6.4 percent rise versus the third quarter of 2017. The company reported third-quarter profits of $2.5 billion, as well as record third-quarter equity income in China and a record GM Financial EBT of $500 million. In other words, it seems things at the Detroit giant are pretty darned good considering crosstown rival Ford is facing all kinds of woes.
So what’s with this cost-saving employee buyout all of a sudden? Digging a bit deeper, profits are up but vehicle sales aren’t quite as robust. It’s the profit margins that are higher – GM is making more money on each vehicle sold – but overall sales volume is down. We aren’t sales pros or financial wizards, but banking more coin per vehicle while sales drop doesn’t sound particularly sustainable to us. When you consider pretty much every automaker is experiencing a sales slump – with some people even saying it’s a prelude to another big recession – there’s certainly a reason for GM to be nervous. Still, offering to cut a third of the workforce while banking $2.5B seems very strange to say the least.
In any case, we suspect this announcement of potentially drastic cost-cutting amid billion-dollar profits at GM will leave more than a few people scratching their heads.
Source: The Detroit News, GM
GM Reports Income of $2.5 Billion and EBIT-adjusted of $3.2 Billion
DETROIT — General Motors Co. (NYSE: GM) today announced third-quarter 2018 earnings results reflecting profitability in all core operating segments. Strong results in North America were driven by all-new full-size trucks, and crossovers. GM China equity income and GM Financial EBT were third-quarter records.
Third-quarter 2018 results:
- Strong EPS-diluted of $1.75 and record third-quarter EPS diluted-adjusted of $1.87
- Revenue of $35.8 billion, up 6.4% from third-quarter 2017
- GM North America EBIT-adjusted of $2.8 billion and margin of 10.2 percent
- Record third-quarter equity income in China of $0.5 billion
- GM Financial EBT of $0.5 billion, a third-quarter record
For complete details and to see reconciliations of non-GAAP measures to their most directly comparable GAAP measures, click here to download the full press release, or visit the GM Investor Relations website.
GM Reports Income of $2.5 Billion and EBIT-adjusted of $3.2 Billion
• Strong EPS diluted of $1.75; record third-quarter EPS diluted-adjusted of $1.87.
• Strong results in North America driven by all-new full-size trucks, and crossovers.
• Third-quarter records for GM China equity income and GM Financial EBT; record quarter for GM Financial revenue.
Q3 2018 RESULTS OVERVIEW
Net Revenue Income Auto Operating Cash Flow EPS Diluted
GAAP $35.8 B $2.5 B $2.5 B $1.75
vs. Q3 2017 + 6.4% + 2,123% + $1.3 B + 2,088%
“Our third-quarter performance demonstrates our determination to manage risks and deliver strong
business results while continuing to advance the future of mobility.”
– Mary Barra, Chairman and CEO
NORTH AMERICA HIGHLIGHTS
GM North America posted strong margins of 10.2
percent in the third quarter, driven by an increase in
average transaction prices that rose to record Q3 highs.
The frst light-duty 2019 Chevrolet Silverados and GMC
Sierras began arriving in dealerships in August.
Customer deliveries of the Silverado LTZ and High
Country and the GMC Sierra SLT, Denali and AT4 crewcab
models have exceeded expectations as production
ramps up to meet expected demand. GM expects to
ship about 120,000 of the new trucks in the second half
of 2018. Production of the all-new Chevrolet Blazer will
begin late in the fourth quarter.
GM Reports Income of $2.5 Billion and EBIT-adjusted of $3.2 Billion
2019 GMC Sierra Denali
Despite challenging market conditions, GM China
achieved record third-quarter equity income, driven by
a strong mix of vehicles in popular segments, led by
record Cadillac sales and strong Chevrolet deliveries.
GM China is introducing 10 new or refreshed models in
the second half of 2018.
The Baojun E200 launched in September. Along with
the Buick VELITE 6 unveiled earlier this year, these are
the frst in a wave of electric vehicles launching in
China in the next several years.
CHINA PERFORMANCE
HONDA JOINS GM CRUISE
In October, GM announced that Honda will join Cruise
and GM to build a new autonomous vehicle. The
purpose-built AV will serve a wide variety of use cases
and be manufactured at high volume for global
deployment.
In addition to its $750 million equity investment in
Cruise, Honda committed another $2 billion to Cruise,
including development costs for the purpose-built AV.
With this transaction, Cruise has now attracted $5
billion in external capital and is valued at $14.6 billion.
GM Financial delivered an all-time record for revenue
and third-quarter record EBT of $0.5 billion, resulting
from portfolio growth and stable credit.
GM FINANCIAL GROWTH
“
North America International GM Cruise GM Financial (EBT)
Q3 18 Q3 17 Q3 18 Q3 17 Q3 18 Q3 17 Q3 18 Q3 17
2.8 2.1 0.1 0.4 (0.2) (0.2) 0.5 0.3
EBIT-adj. margin of 10.2%
due to all-new full-size
trucks, continued crossover
performance and overall
favorable pricing.
Continued strong EBT and
revenue growth; GMF to pay
a d i v i d e n d t o G M
commencing in the fourth
quarter.
SEGMENT RESULTS (EBIT-ADJUSTED – $B)
Results include record Q3
China equity income of
$0.5 billion, ofset by
continued weakness of
South American currencies.
“Our disciplined approach to the U.S. market, combined with strength in China and further growth of GM
Financial, drove a very strong quarter. We will continue to take actions to mitigate headwinds including
foreign currency volatility and commodity costs.”
– Dhivya Suryadevara, Chief Financial Officer
Cadillac’s first-ever XT4 compact luxury SUV began
arriving in showrooms in the U.S., Canada and China in
the third quarter. Cadillac will introduce a new model
every six months through 2020, continuing next with
the three-row XT6.
Super Cruise received the top spot in Consumer
Reports’ ranking of partially automated driving
systems. Earlier this year, Cadillac announced Super
Cruise technology will become available on every
model starting in 2020.
Based on the current rate of
iteration, Cruise continues
to target commercialization
in 2019 in a dense urban
environment.
As previously announced, GM is increasing production
of the Bolt EV in the fourth quarter by 20 percent to
meet growing demand.
GM has partnered with Delta Electronics to develop
faster EV charging technology. GM will deliver a
prototype vehicle capable of a 180-mile range with
less than 10 minutes of charging.
PROGRESS IN ELECTRIC VEHICLES
CADILLAC GAINING MOMENTUM
LIQUIDITY ($B)
Q3 18 Q4 17
Cash and Current Marketable Securities
(includes GM Cruise) 19.8 19.6
Total Liquidity 33.9 33.6
(excludes GM Financial)
Q3 VEHICLE SALES
2019 Cadillac XT4
GM delivered nearly 700,000 vehicles in the U.S. in the
third quarter. Average transaction prices rose to a
third-quarter record of more than $36,000, up about
$800 per unit year over year and $4,000 above
industry average.
Sales of the Chevrolet Tahoe, Suburban and GMC
Yukon full-size SUVs were up approximately 12 percent
year over year. The Chevrolet Colorado and GMC
Canyon posted the best third-quarter midsize pickup
sales since 2004.
GM China delivered nearly 836,000 vehicles in the
third quarter. Chevrolet gained momentum as year-to-date
sales were up 10 percent, led by higher content
crossovers including the Equinox, which saw
29 percent growth compared to a year ago.
Cadillac sales in China set a third-quarter record, up 4
percent year over year and up 20 percent year to date.
The brand is capitalizing on the country’s luxury
trend, and sales are expected to grow for the full year.
Cautionary Note on Forward-Looking Statements.
This presentation and related comments by management may include forward-looking statements. These statements are based on current expectations
about possible future events and thus are inherently uncertain. Our actual results may difer materially from forward-looking statements due to a variety of
factors, including: (1) our ability to deliver new products, services and experiences that attract new, and are desired by existing, customers and to efectively
compete in autonomous, ride-sharing and transportation as a service; (2) sales of crossovers, SUVs and full-size pickup trucks; (3) our ability to reduce the
costs associated with the manufacture and sale of electric vehicles; (4) the volatility of global sales and operations; (5) our signifcant business in China
which subjects us to unique operational, competitive and regulatory risks; (6) our joint ventures, which we cannot operate solely for our beneft and over
which we may have limited control; (7) changes in government leadership and laws (including tax laws and regulations), economic tensions between
governments and changes in international trade policies, new barriers to entry and changes to or withdrawals from free trade agreements, changes in
foreign exchange rates, economic downturns in foreign countries, difering local product preferences and product requirements, compliance with U.S. and
foreign countries’ export controls and economic sanctions, difering labor laws and regulations and difculties in obtaining fnancing in foreign countries; (8)
our dependence on our manufacturing facilities; (9) the ability of suppliers to deliver parts, systems and components without disruption and on schedule;
(10) prices of raw materials; (11) our highly competitive industry; (12) the possibility that competitors may independently develop products and services
similar to ours despite our intellectual property rights; (13) security breaches and other disruptions to our vehicles, information technology networks and
systems; (14) compliance with laws and regulations applicable to our industry, including those regarding fuel economy and emissions; (15) costs and risks
associated with litigation and government investigations; (16) the cost and efect on our reputation of product safety recalls and alleged defects in products
and services; (17) our ability to successfully and cost-efciently restructure operations in various countries, including Korea, with minimal disruption to our
supply chain and operations, globally; (18) our ability to realize production efciencies and to achieve reductions in costs; (19) our ability to develop captive
fnancing capability through GM Financial; and (20) signifcant increases in pension expense or projected pension contributions. A further list and
description of these risks, uncertainties and other factors can be found in our Annual Report on Form 10-K for the fscal year ended December 31, 2017, and
our subsequent flings with the U.S. Securities and Exchange Commission. GM cautions readers not to place undue reliance on forward-looking statements.
GM undertakes no obligation to update publicly or otherwise revise any forward-looking statements.
Basis of Presentation
The fnancial and operational information included in this press release relate to our continuing operations and not our discontinued operations, which
consist of the Opel and Vauxhall businesses and certain other assets in Europe and the European fnancing subsidiaries and branches that were sold in 2017.
General Motors (NYSE:GM) is committed to delivering safer, better and more
sustainable ways for people to get around. General Motors, its subsidiaries and
its joint venture entities sell vehicles under the Cadillac, Chevrolet, Baojun,
Buick, GMC, Holden, Jiefang and Wuling brands. More information on the
company and its subsidiaries, including OnStar, a global leader in vehicle safety
and security services, Maven, its personal mobility brand, and Cruise, its
autonomous vehicle ridesharing company, can be found at gm.com.
Source: Read Full Article