General Motors Delivers Strong Q4 2017 Results On The Back Of A Positive Portfolio Mix And Cost Savings

by Trefis Team
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General Motors (NYSE:GM) announced its Q4 2017 results on February 6th 2018 and the company beat analyst expectations for EPS (earnings per share) which stood at $1.65 for Q4 2017 as against consensus estimates of $1.38. Net revenues for the quarter stood at $37.7 billion, higher than the consensus estimates of $36.55 billion. These strong results were driven by a 10.7% margin in North America which the company was able to achieve despite a 10% decline in wholesales through an improved portfolio mix and cost efficiencies.

The below charts summarize the company’s performance for Q4 2017 and our estimates for 2018:

  You can click here to access these charts and modify the assumptions.

General Motors’ average transaction price in the U.S. continues to grow and its Q4 ATP stood at $37,000 which was $1,500 higher than Q4 2016. The company focus on achieving cost efficiencies is showing results – translating into a better EBIT (Earnings before interest and tax) and higher margins despite falling volumes.

Going Forward:

  • GM expects an EBIT (earnings before interest and tax) adjusted margin of more than 10% in North America in 2018 driven by its new launches of crossovers, full size trucks, and its continued focus on cost savings.
  • In China, GM expects the pricing pressures to continue but a richer mix of vehicles – tilted towards crossovers and luxury models is likely to drive growth in its equity income from the country.
  • The company continues to make progress in its vision of personal mobility and recently filed a safety report for deployment of its fourth generation Cruise AV. This is GM’s first production ready driverless vehicle — a milestone towards its goal of deploying a driverless ride sharing fleet in 2019.

We will be updating our model based on these results and the company’s outlook for 2018, which can lead to a change in our price estimate for the company.

 

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