Key Takeaways From General Motors’ Q1 Results
General Motors (NYSE: GM) reported its first-quarter results 26 April and conducted a conference call with analysts the same day. The company reported better than expected results after excluding its significant restructuring expenses incurred in its Korean operations. However, despite beating market estimates, the company’s adj-EPS and revenue declined when compared to the same period last year. General Motors reported an adj-EPS of $1.43 and a total revenue of $36.10 billion, 13% and 4% lower sequentially. The fall in earnings depicts the company’s lower output in North America, although the company benefited from increased sales of higher margin crossovers.
The company’s North American wholesale volume declined by 5% year-on-year (y-o-y) and 2% sequentially, negatively impacting the company’s top line. The company’s management indicated that lower output was a resultant factor of planned downtime at GM’s North American factories, to gear up for production of new versions of its full-size pickup trucks in North America. Additionally, a weaker passenger car market also led to a decline in sales volume. On the other hand, General Motors established record sales for its crossovers with deliveries of new crossovers doubling in the U.S., and in China. The company is fairly optimistic about its performance in China and plans to introduce 15 new models in 2018, largely focused on SUVs, MPV, and the luxury segment.
Going forward, the company doesn’t plan to cut its sedan variants unlike its competitor Ford, as it believes that a sufficient opportunity exists to strive in this market. Additionally, since most of their sedan models were updated in 2015, the company requires little or no capital deployment to maintain this segment. The company has maintained its initial guidance presented in January post its first-quarter performance and expects adj-EBIT margin to be at a similar level as 2017. We have kept our 2018 outlook for the company’s 2018 performance the same based on the company’s latest results. You can make changes to our estimates by using our interactive dashboard.
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