General Motors CEO Mary Barra said Friday the automaker’s first-quarter results show the company’s strategy of focusing on profitable areas and pulling back on others is making a difference.
The automaker’s profits soared 33 percent during the first three months of the year to $2.6 billion — a first-quarter record for the company since it emerged from bankruptcy in 2009. That compares with $1.93 billion GM earned during the same period a year ago.
The profits are notable because industry sales in North America are beginning to fall after a seven-year period of sustained growth. GM’s earnings came one day after Ford said its first-quarter profits fell 35 percent to $1.6 billion. It was the eighth straight quarter that the company beat Wall Street expectations.
The bigger profits were mostly driven by strong performance in North America and China.
In Europe, a division that has dogged the automaker for years, GM lost $200 million.
Barra said GM’s profits will “immediately improve” after it completes the sale of its European division. GM agreed to sell its Opel and Vauxhall brands to PSA Groupe for $2.2 billion in March and expects to take a $4.5 billion charge when it completes the sale later this year.
“For GM, the sale is another step in our ongoing work to transform the company by strengthening our core business, investing resources in higher return opportunities, including personal mobility, and returning significant capital to our shareholders,” Barra said.
Chuck Stevens, GM’s chief financial officer, said the sale of Opel will allow GM “to take significant structure out of the business” by reducing its corporate staff and engineers.
“We think that’s going to generate significant cost savings,” Stevens said.
During the first quarter, the automaker’s performance translated into earnings of $1.70 per share, easily beating Wall Street’s expectations. Analysts, on average, thought GM would earn $1.48 per share.
GM’s stock rose 10 cents, or 0.3 percent, on Friday to close at $34.64. GM also said its global revenue increased 10.6 percent to $41.2 billion.
Brian Johnson, an analyst for Barclays, said investors continue to be worried about expectations that industry sales will fall in the U.S. and GM’s profits will suffer as it deals with bloated inventory.
“We believe GM deserves to be better rewarded for overall strong results and execution,” Johnson said. “But, unfortunately, sometimes the prevailing market sentiment can be overly difficult to fight.”