Cars and Drivers

GM Earnings Crush Estimates, Market Share Rises in North America

Paul Ausick

Published: April 21, 2016 8:35 am

Last Updated: January 13, 2020 10:30 am

General Motors Co. (NYSE: GM) reported first-quarter 2016 results before markets opened Thursday. The automaker posted adjusted diluted earnings per share (EPS) of $1.26 on revenues of $37.3 billion. In the same period a year ago, the company reported EPS of $0.86 on revenues of $35.7 billion. First-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $1.01 and $35.4 billion in revenues.

North American first-quarter EBIT-adjusted earnings rose to $2.7 billion from $2.1 billion in the year-ago quarter. EBIT-adjusted margins came in at 7.1%.

Global deliveries slipped 2.5% in the first quarter primarily due to “macroeconomic challenges” in South America. Market share fell 20 basis points year over year, primarily due to low volumes in South America and the company’s decision to reduce the volume of daily rentals in North America.

Cash flow from automotive operations was a negative $700 million and adjusted free cash flow was a negative $1.5 billion. Cash flow in the quarter included a $1.5 billion discretionary contribution to the company’s pension plan. Operating cash improved by $800 million year over year and capital spending rose by $600 million.

Mary Barra, the company’s CEO, said:

We’re growing where it counts, gaining retail share in the U.S., outpacing the industry in Europe and capitalizing on robust growth in SUV and luxury segments in China. This strong quarter also reflects the excellent progress we’re making to improve results in our more challenged global markets. Importantly, the continued success of our core business is enabling us to invest in advanced technology and innovations that will help shape the future of personal mobility.

The company reaffirmed its full-year adjusted, diluted EPS forecast of $5.25 to $5.75 and its adjusted free cash flow forecast for the year of approximately $6 billion. Analysts are looking for second-quarter EPS of $1.54 and revenues of $38.61 billion. For the full year, the consensus estimate calls for EPS of $5.48 and revenues of $153.1 billion.

GM’s North American retail market share rose by 1.1% year over year to 16.4% in the first quarter. Incentive spending in the division totaled 11.7% of the average transaction price, 5% higher than the industry average.

Market share in Europe was flat year over year at 6.1%, which includes the impact of GM’s exit from the Russian market. International market share was down slightly from 10% in the first quarter of last year to 9.8%. Market share in China also fell 20 basis points to 14.8%.

GM’s shares traded up about 3.8% in Thursday’s premarket session, at $33.40 in a 52-week range of $24.62 to $36.88. The consensus price target for the shares was around $37.59 before the report.