General Motors (NYSE:GM) Beat Earnings: Analysis of its Segments
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The auto manufacturer General Motors (NYSE:GM) announced its third quarter earnings amounting to $1.4 billion as its margins in North America were swiped away by the pressures in South America and Europe. The company generated revenue of $39.3 billion which was an accomplishment since last year. With the exception of special items, the auto manufacturer gained $0.9 per share in its third quarter.
The price increased by a penny since last year and was more than its $0.95 consensus estimate by analysts as Bloomberg reported. A report was released by a Wall Street Analyst this month which caused the shares of General Motors (NYSE:GM) to drop by 6%. In premarket trading the company’s shares soared 3%. In order to understand how the company is performing, its segments must be analyzed:
Europe- the company posted a huge loss in this segment amounting to nearly $387 million. This is much more than the one it posted last year. With a steep decline in new vehicles sales in Russia, automakers are being affected which include General Motors (NYSE:GM).
North America– the company gained $2.45 billion in its third quarter from North America. This was more than its $2.2 billion gain last year which shows positive growth in the segment. Even with the safety scandal the company was facing when it had to recall more than 30 million of its vehicles, the company proved to boost margins.
International Operations- this segment made the company $259 million in its third quarter which was far below its $323 million last year. However the equity income increased to $490 million from the previous $424 million with the joint ventures in China.
GM Financial- the company’s in-house finance team made a profit of nearly $205 million in its third quarter which was $34 million less than what it made a year ago. It has more leasing, lesser subprime lending and increased losses in credit making it to 2% which was up 0.1% since the previous year.
South America– this segment lost the company $32 million in its third quarter which had a harsh decline from its $284 million the last year. New vehicle sales dropped due to some of the key countries in South America like Brazil. Ford (NYSE:F) also lowered its expectation from the segment this month but General Motors (NYSE:GM) wasn’t worried about the segment as Ford (NYSE:F) and Chrysler stated its position here was flat.
General Motors (NYSE:GM) is working on its position with margins in its North American segment increasing as we speak. The company still has to get back on its feet in South America as well as Europe. However the company posted better third quarter results than what was expected even with the pressure on pricing of pickup-trucks, recalls and slow growth in China. Wall Street observers might have been too harsh with skepticism about the company but for now it’s still in the game.