General Motors Company (GM-NYSE) shares were higher by 4% into mid-afternoon trading Thursday after reporting adjusted net income that more than doubled in Q2 2015, driven by North American truck sales and continued strength in China.
During Q2, GM earned $1.29 a share in, stripping out one-time charges, up from 58 cents a share. Despite declining global vehicle deliveries and a 3.5 percent decline in worldwide revenue, profits rose. GM net income rose to $1.1 billion or 67 cents a share, from $200 million or 11 cents a share during same period in 2014.
North American operations for GM were the main engine of growth for the company, as profits in the region doubled to $2.8 billion and profit margins of 10.5%.
GM's North American results were hit by a $75 million charge for a compensation fund for victims in its recall of millions of vehicles with defective ignition switches, reducing the compensation fund to $625 million, a figure Stevens said would not significantly rise.
GM Chief Financial Officer Chuck Stevens reaffirmed the carmakers forecast that operating profit for the full year would improve from last year's $9.3 billion. GM’s return on investment capital in the past 12 months was 23.4%, ahead of the 20% goal.
During a briefing with reporters, Stevens said, "There are lots of levers we can pull", to cut costs and maintain profit margins in China which improved to 10.2% from 10% a year ago. Despite slower-than-expected vehicle sales and intensifying price competition in the world's largest vehicle market, Stevens said the automaker still expects to maintain strong profitability in China.
Over the next several years, GM is committed to spending $14 billion on new vehicles and facilities in China. Stevens said, "Our long term view on China hasn't changed." He said that within the next 10 to 15 years, China's auto market will grow to 35 million vehicles a year.
Contributed by Millennium Traders
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