General Motors (GM) on Thursday reported higher-than-expected quarterly earnings, citing strong results in North America and an improved performance in Europe.
The automaker’s shares were up 3.5% at $33.30 in premarket trading after rising as high as $33.68. That is still only just above their 2010 initial public offering price of $33, despite three straight quarters of record-breaking pretax profits.
CEO Mary Barra has stepped up efforts to persuade skeptical investors that GM can deliver consistently strong profits – and return billions to shareholders – through the ups and downs of the industry’s sales cycles.
First-quarter net income more than doubled to $2 billion, or $1.24 a share.
Excluding a one-time expense for litigation settlements, earnings were $1.26 a share, well ahead of analysts’ expectations of $1.00.
The company said pretax income, excluding one-time items, was a record for the first quarter.
GM said it still expected full-year earnings of $5.25 and $5.75 a share, excluding special items, up from $5.02 in 2015.
Revenue for the first quarter rose 4.5% to $37.3 billion. Adjusted profit margins increased to 7.1% of revenue from 5.8% a year earlier.
North America accounted for 85% of GM’s earnings before interest and taxes, reflecting robust profits from sport utility vehicles and pickup trucks.
Margins from the region, however, fell to 8.7% from 8.8% a year earlier. CFO Chuck Stevens attributed the decline to restructuring costs and more U.S. union members taking packages to retire.
Stevens said the company still expected North American margins of more than 10% for 2016.
In Europe, GM broke even, reversing a year-earlier loss of $200 million.
Stevens affirmed the company’s target for 8% profit margins in Europe over the next several years, but said the possibility that the United Kingdom will leave the European Union is a concern. “What does that do to pound sterling?” he said. “What does that do to business, and business transactions?”
The automaker narrowed losses in South America. Income from joint ventures in China was flat at $500 million for the quarter.