General Motors‘ second-quarter net profit fell more than 40 percent as the carmaker lost money on the sale of its European unit and took charges for restructuring in India and selling its business in South Africa.
GM made net income of $1.66 billion, compared with a record $2.87 billion a year ago. But when the European loss and one-time items are stripped out, GM made $2.4 billion from continuing operations, or $1.89 per share. That’s down 12 percent from last year but still easily beat Wall Street estimates. Analysts polled by FactSet expected only $1.68 per share.
Revenue was $37 billion excluding Europe, falling short of analyst estimates of $40.3 billion.
Chief Financial Officer Chuck Stevens called it a strong quarter with pretax earnings of $3.7 billion. That’s down $100 million from a year ago, due largely to a $270 million drop in North America that Stevens attributed to production cuts as the company ramps up to launch new Silverado and Sierra full-size pickup trucks.
GM’s bottom line includes a $770 million loss as it prepares for the sale of its European Opel and Vauxhall brands to France’s PSA Group, owner of Peugeot and Citroen. It also includes $654 million in one-time items from restructuring in India, the sale of GM’s South Africa business and lingering legal costs from an embarrassing ignition switch recall. Stevens said the sale to PSA is on track to close by the end of the year.
GM’s dealer inventory in the U.S. grew by 273,000 at the end of June compared with last year, to 707,000, as it ramped up to launch the Buick Enclave and other new midsize SUVs, and prepared for the new pickup trucks. That’s enough inventory to supply dealers for 105 days. But Stevens said the company will cut production by 150,000 vehicles in the second half versus the first, including car reductions and 13 weeks of downtime at truck factories to switch to the new models. That should bring inventory down to a more normal 70-day supply by the end of the year,…