DETROIT (AP) - Shares of General Motors jumped more than 3 percent in early trading Tuesday as investors focused on a $2.5 billion third-quarter pretax profit and ignored a big accounting loss.
The Detroit automaker’s stock rose $1.47 to $46.62 shortly after the market opened. Shares briefly hit a new record high since the company went public in 2010 after a trip through bankruptcy protection.
GM’s $3 billion net loss came from a $5.4 billion charge for selling Opel and Vauxhall to France’s PSA Group, which closed in August. But with that backed out and before taxes, the company made $1.32 per share, trouncing Wall Street estimates. Analysts polled by FactSet expected $1.11 per share.
Much of the accounting charge came from previous losses that GM can’t use to offset future tax obligations.
Revenue without Europe fell 14 percent to $33.6 billion, but that also beat expectations of $32.2 billion.
GM says its strong pretax performance came despite a 26 percent production cut in North America to close out the 2017 model year and adjust to slowing demand, mainly for passenger cars. The company made just over $2 billion pretax in North America, as well as just under $500 million from its joint venture in China.
Chief Financial Officer Chuck Stevens said the company overcame the production cuts because it sold more high-profit trucks and SUVs and fewer lower-margin sedans, but it also cut costs at an annual running rate of $5 billion since 2014. The company also has cut low-profit sales to rental car companies and focused more on sales to individual buyers. Stevens attributed the performance to “overall resilience of a better business model that we built in North America.”
With Europe no longer included, GM reported profits for all of its business units for the first time since 2014. Even South America, which has been a money loser in recent quarters, posted a $52 million pretax profit.
With European operations backed out, GM posted a net profit from continuing operations of $100 million.
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